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CARNEGIE PENSIONS 



BY 



i -• 



J. McKEEN CATTELL 



TOGETHER WITH 

EXTRACTS FROM LETTERS FROM TWO 
HUNDRED AND FOURTEEN COLLEGE AND 
UNIVERSITY PROFESSORS, AN ARTICLE 
ON THE HISTORY OF THE CARNEGIE 
FOUNDATION BY JOSEPH JASTROW, AND 
THE REPORTS OF THE COMMITTEE ON 
PENSIONS AND INSURANCE OF THE 
AMERICAN ASSOCIATION OF UNIVERSITY 
PROFESSORS 



THE SCIENCE PRESS 
NEW YORK AND GARRISON, N. Y. 

1919 






PRESS OF 

THE NEW ERA PRINTING COMPANY 

LANCASTER, PA. 







PREFACE 

The Carnegie Foundation has made lavish dis- 
tribution of its literature ; it seems desirable that 
the position adverse to its plans for the control 
of academic teachers should be stated in acces- 
isible form. There are consequently here repro- 
duced several articles that I have written on the 
subject, including extracts from 214 letters by 
university and college professors; an article on 
the history of the foundation by Professor Jas- 
,trow, and the reports of the committee on pen- 
sions and insurance of the American Association 
of University Professors. Permission has been 
obtained from Professor Jastrow for the use of 
his article. The reports of the committee of the 
American Association of University Professors 
were printed in a journal that I edit, but the 
association is not responsible for their present 
republication. 

Dr. Henry S. Pritchett, president of the Car- 
negie Foundation and of the new Carnegie Com- 
pany, opens his article on "The Pension Prob- 
lem and its Solution" in the December (1918) 
issue of The Atlantic Monthly with the definition 
of " Pension" in Dr. Johnson's Dictionary: 

An allowance made to- any one without equivalent. In 
England, it is generally understood to mean pay given 
to a state hireling for treason to his country. 

iii 



i v CABNEGIE 

He characterizes the effects on the professor of 
the foundation that he has administered for 
thirteen years as follows : 

Aside from the economic and financial weaknesses 
which have just been alluded to, there is a more serious 
objection to the free pension which only those who have 
administered such a system can fully understand. This 
lies in the fact that, to get something for nothing, or 
to seem to get something for nothing, has always proved 
demoralizing. The so-called free pension is perhaps the 
most prolific breeder of human selfishness ever set up in 
the social order. 

Dr. Nicholas Murray Butler, president of Co- 
lumbia University and a member of the execu- 
tive committee of the Carnegie Foundation, in 
one of his last reports quotes the sentiment: 
"Academic freedom means freedom to say what 
you think without thinking what you say, ' ' and 
he writes still more explicitly in the Educational 
Review : 

Truly the academic animal is a queer beast. If he can 
not have something at which to growl and snarl, he will 
growl and snarl at nothing at all. 

These remarks by those responsible for the ad- 
ministration of Carnegie Pensions scarcely ex- 
hibit an attitude proper for the conduct of a 
(foundation established to "encourage, uphold 
and dignify the profession of the teacher and the 
cause of higher education. ' ' They are quoted in 
( order to use the authority of office as a shield for 
the character of the counter-statements made by 



PENSIONS v 

college and university professors in some of the 
letters here printed. 

Criticism is always ungracious ; it is futile un- 
less it leads to construction. Mr. Carnegie and 
Mr. Rockefeller have had the best of intentions 
in making their large endowments ; most of those 
who conduct these foundations and most of the 
trustees and executive officers of our endowed 
universities have sincere faith in the methods 
that they use and in the objects that they seek 
to accomplish. But a democracy can not submit 
to the policy that the common people should do 
the work assigned to them and leave it to the 
king and his lords to care for them. 

As is shown in this book, the teachers directly 
concerned hold by a majority of fifty to one that 
the plans of the Carnegie Foundation are un- 
satisfactory. The only solution is to change the 
plans. The first step should be to discard those 
responsible for the existing situation; then the 
teachers should come into control of a foundation 
established for their benefit. 

J. McK. C. 

Garrison-on-Hudson, N. Y. 
, May, 1919 



CONTENTS 

Page 
Life Insurance and Annuities for Academic 

Teachers 5 

The "Policies" of the Carnegie Company. 28 

The Verdict of American University Pro- 
fessors 59 

The Carnegie Foundation for the Advance- 
ment of Teaching 100 

The Fifth Annual Report of the President 
of the Carnegie Foundation 128 

Ten Years of the Carnegie Foundation. By 
Joseph Jastrow 135 

Report of the Committee of the American 
Association of University Professors on 
Pensions and Insurance 184 

Second Report of the Committee on Pensions 
and Insurance of the American Asso'cia- 
tion of University Professors 213 

Supplementary Statement concerning the 
Plan of Compulsory and Contributory 
Annuities proposed by the Carnegie Foun- 
dation. By Arthur 0. Love joy and 
Harlan I. Stone 241 



VI 



LIFE INSURANCE AND ANNUITIES FOR 
ACADEMIC TEACHERS* 

When Mr. Andrew Carnegie made in 1905 
his munificent gift of ten million dollars to es- 
tablish the Carnegie Foundation for the Ad- 
vancement of Teaching, he wrote to the trus- 
tees: "Expert calculation shows that the rev- 
enue will be ample' ' "to provide retiring pen- 
sions for the teachers of universities, colleges 
and technical schools in our country, Canada 
and New Founded.'' The university presi- 
dents who formed the board of trustees may 
have calculated that the fund would provide 
large subsidies for their institutions, but it is 
difficult to guess who could have made the cal- 
culation that the income from ten million dollars 
would permanently provide pensions for college 
and university teachers throughout North 
America. 

The president of Columbia University in his 
annual report for 1906 stated that the cost of 
the Carnegie retiring allowance to the professor, 
if in middle life, "would be not less than $1,200 
annually.' ' If all the teachers were in middle 
life, the total annual cost of the system for 
Columbia alone would consequently be twice the 
whole income of the foundation. The present 
writer printed in 1909 the basis for the calcula- 

i Printed in School and Society , November 9, 1918. 

5 



6 CAENEGIE 

tion that forty years hence a complete pension 
system for academic teachers might require two 
hundred times the income of the foundation. 

The inevitable has happened, as it inevitably 
does. The foundation was compelled to limit 
the institutions included in its list, so that, for 
example, at present only four pensions are paid 
in the state of Illinois. It was compelled to 
give up its length of service pensions, even for 
those to whom they had been promised; it was 
compelled two years ago to abandon the whole 
plan of free pensions; it now finds that its re- 
sources will not pay the obligations into which it 
has already entered. 

All sorts of irrelevant explanations have been 
offered by the president of the foundation, Dr. 
Pritchett, and by the trustees for these various 
steps. Institutions were not worthy to be in- 
cluded. Thus, to take an example, which at the 
same time illustrates the pernicious control that 
the foundation has sought to exercise even over 
state universities, the University of Illinois was 
informed, at the time when the funds of the 
foundation were exhausted, that pensions could 
not be granted to the professors in its academic 
departments at Urbana unless it would alter the 
conduct of its medical school at Chicago. In 
like manner the governor of Ohio was informed 
that the universities of the state must be "re- 
constructed" on lines laid down by the founda- 
tion if the professors in the Ohio State Univer- 
sity were to hope for pensions. 



PENSIONS 7 

When the foundation found that it had no 
money to pay the length of service pensions, 
which were one of the two objects specified in 
its charter, it did not mention its financial in- 
ability, but the president announced that it had 
been discovered that the effect of the length of 
service pensions was not "good" owing to "the 
opportunity which is opened to bring pressure 
to bear on the teacher, or by the tendency of 
the teacher assured of a retiring allowance to 
become ultra-critical toward the administra- 
tion.' ' When the foundation could no longer 
pay the old-age pensions it had promised, it was 
announced that it is bad for teachers to "have 
the risk of dependence lifted from them by free 
gift," that it is "even an embarrassing use of 
trust funds." But now finally, when it can no 
longer be concealed, confession of insolvency is 
made. 2 

Whether what the officers of the foundation 

call the * ' expectations" of the professors, namely, 

the promises of the foundation, are contracts is 

a question that the courts may be called upon to 

decide. Professors have in many cases moved 

from an independent institution to a Carnegie 

2 The most severe arraignment of the foundation will 
be found in the annual reports of the president. A criti- 
cal review has been published by Professor Joseph Jas- 
trow in School and Society, October 7, 1916. The pres- 
ent writer has discussed the conduct of the foundation in 
Science, April 24, 1908, April 2, 1909, March 11, 1910, 
December 2, 1910, March 3, 1911 and April 15, 1916. 



8 CABNEGIE 

institution in view of the promise of a pension ; 
they have given up lucrative business or profes- 
sional careers owing to the permanence of ten- 
ure and the pensions that have been guaranteed, 
and the like. It may be that the courts will de- 
cide that the promises of payment for these 
services are contracts, in which case the cor- 
poration will be technically bankrupt. In any 
case it is morally insolvent, and it might be sup- 
posed that it would place its affairs in the hands 
of a receiver selected by its creditors for such 
adjustments as can be made with least injury to 
them. 

But the president of the Carnegie Founda- 
tion and the presidents of universities who are 
its trustees cling to their power to control our 
academic institutions and their teachers. They 
have grasped "the skirts of circumstance." 
No longer having money to pay for their over- 
lordship, they have devised a plan of contribu- 
tory and compulsory annuities which will com- 
pel institutions and teachers to pay for their 
own subjection. 

Industrial workers understand how com- 
pletely pension systems place them at the mercy 
of their employers. Thus a trade-union paper 
remarks : 

Twenty years of continuous, faithful service are de- 
manded by most pension-advertising corporations before 
the worker is entitled to a certain monthly or weekly al- 
lowance. Twenty years during which time the slave 



PENSIONS 9 

must always be humble, never grumble, do everything de- 
manded, never think of trying to better his conditions, 
be always satisfied, and never, never join his fellows in 
an organization for the purpose of enforcing demands 
he individually can not obtain. And this is the kernel 
contained in the sugar-coated pension pill. 

In the case of college and university teachers 
a pension system may prove particularly per- 
nicious, for it can be used to control not only 
their freedom of action, but also their freedom 
of teaching and of investigation. President But- 
ler's statement is quoted above to the effect that 
the cost of a pension may be $1,200 a year to 
the professor. This considerable sum is with- 
held from his salary, to be repaid ultimately for 
good behavior. The professor who does not see 
eye to eye with Wall Street and Trinity Church 
may be compelled to sacrifice either his intel- 
lectual integrity or his wife and children. He is 
under heavy bonds to keep the peace; but it will 
be the peace of the desert. 

The control which a pension system may seek 
to exercise can be illustrated by an example. 
When in 1910 the present writer enquired 3 
whether he could obtain the length of service 
pension which the rules of the Carnegie Foun- 
dation had provided, the president in his reply 
described the inquisition that would be under- 
taken into his scientific ability and said in con- 
clusion : 

s The correspondence is printed in Science, December 
2, 1910. 



10 CAENEGIE 

I ought to add that the foundation would view with 
grave concern the possibility of your withdrawal from 
editorial duties. We should find it difficult to get along 
without the aid of your kindly and encouraging editorial 
scrutiny. 

To this the reply was made: 

Your last paragraph is presumably only legitimate 
irony; but it is open to the unfortunate interpretation 
that beneficiaries of the foundation may not criticize 
its conduct or the educational schemes it promotes. 

Professor Josiah Royce, one of the greatest 
and noblest of our teachers, in a criticism 4 of 
the unjustifiable interference of the Carnegie 
Foundation with the affairs of Middlebury Col- 
lege, wrote with reference to this incident: 

The Carnegie Foundation is from its very nature not 
responsible in any obvious and regular way to existing 
academic opinion. It carries out the wishes of its 
founder as interpreted by a board of trustees whose 
powers are, comparatively speaking, autocratic. This 
board inevitably represents the judgment of administra- 
tors rather than the judgment of teachers. Experience 
has shown that the foundation is not very sensitive to the 
opinion of teachers. In a well-known case, when an emi- 
nent teacher whom we all value expressed a plain and 
not unreasonable opinion of some of its acts, the reply 
of the Carnegie Foundation, through its president, was 
a sarcastic intimation, which could only be understood 
as meaning that some people ought to mind their own 
business. 

It is possible that it may on the average be to 
the financial advantage of an institution to re- 
4 School and Society, January 30, 1915. 



PENSIONS 11 

tire professors at the age of sixty-five. It is 
doubtless so if the pension is paid by an outside 
corporation or by enforced contributions from 
the professors. But it is not an advantage to 
the teacher to be dismissed from his life work 
and be relieved of half of his salary at a time of 
life when men in other professions and in busi- 
ness are active and earning larger incomes than 
ever before. When in recent years the writer 
wanted the best legal advice in New York City 
he consulted Mr. Choate; when he wanted the 
best medical advice he consulted Dr. Jacobi; 
when he wanted the best possible article to in- 
augurate School and Society he obtained it from 
President Eliot. None of these men lost his in- 
tellectual vigor in the eighties. Now when I 
want the best actuarial advice in New York City 
I consult an actuary seventy-four years of age. 
My two great teachers in psychology — Professor 
March, of Lafayette College and Professor 
Wundt, of the University of Leipzig — continued 
their teaching until they were over eighty. 

The situation of the professor is peculiar be- 
cause the continuation of his work after the age 
of sixty-five years depends on the favor of the 
president. The president decides each year 
whether the professor shall be kept on, judging 
his competence for the work, and being influ- 
enced by other considerations, such as the means 
of the institution, the availability of a successor, 
the professor's "loyalty" to him personally, and 



12 CABNEGIE 

the like. The whole theory of permanence of 
tenure on which the low salary of the professor 
is based breaks down at the age of sixty-five. 
Any one familiar with the conditions at a uni- 
versity such as Columbia, will know the bitter- 
ness and humiliation which result from drop- 
ping men as they grow older on the ground of 
alleged incompetence. The professorship should 
be a life office, as it is in Great Britain, in France 
and in Germany. The older teachers should be 
relieved of work that they find irksome or can 
not do to advantage ; and teachers should be en- 
titled to a pension for disability at any age. 

Any plan for the retirement of older or dis- 
abled professors should be left to the institutions 
in which they teach. If the pension is paid from 
outside sources, the temptation of the president 
to retire the professor prematurely is greatly 
enhanced. Most of the eastern universities had 
pension systems, which were contracts with their 
professors, before the Carnegie Foundation in- 
tervened. That corporation should have used 
its income, or preferably its capital, to establish 
disability pension systems in institutions where 
they did not exist, and to strengthen the systems 
in the interest of the institution and its pro- 
fessors where they were already in operation. 
Variation in different institutions would allow 
opportunity for the survival of the fit; and the 
ablest men would go to the institution offering 
the plan most acceptable to them. By its meth- 



PENSIONS 13 

ods of centralization and outside control the 
Carnegie Foundation has done its share to de- 
moralize the entire university situation. 

Instead of confessing their incompetence and 
insolvency and leaving pension systems to the 
educational institutions where they belong, the 
university presidents who are the trustees of the 
Carnegie Foundation now propose to maintain 
and even enlarge their control of academic 
teachers by establishing a contributory and com- 
pulsory system of annuities. The American As- 
sociation of University Professors appointed a 
committee of twenty-four with Harlan I. Stone, 
dean of the Columbia Law School, as chairman, 
to report on the situation. This committee drew 
up a careful report 5 in which it says : 

Thus it seems clear that the Carnegie Foundation is 
under moral obligations, not only to individuals, but to 
the institutions themselves, not to deprive teachers in the 
accepted institutions of their present expectancy of a 
pension. There is no middle ground for the compromise 
of moral obligations. We are therefore of the opinion 
that the Carnegie Foundation should not assume any 
new functions until its present obligations both moral 
and legal are examined with precision, and provision 
made explicitly for meeting those obligations. 

The committee further says in the concluding 
paragraph of its report : 

The unfortunate financial history of the foundation, 
the suggested change in its fundamental purpose under 
the guise of a change of rules relating to its administra- 

5 Printed in School and Society, December 2, 1916. 
2 



14 CABNEGIE 

tion, the defects and omissions in the proposed Compre- 
hensive Plan of Insurance and the unconvincing char- 
acter of the reasons which are urged for the change, 
have resulted in a loss of confidence in the foundation 
on the part of American university teachers. No man 
enjoying a wide acquaintance with members of the pro- 
fession can have any doubt of this fact. If evidence of 
it were needed, it may be found in the reports of various 
committees of university faculties, appointed to consider 
the Comprehensive Plan of Insurance and Annuities, 
such as, for example, the reports of Cornell, Harvard, 
Princeton, Stanford Universities, the University of Wis- 
consin and Johns Hopkins University. Such lack of con- 
fidence must inevitably impair the usefulness of the 
foundation, and make it difficult, if not impossible, to 
solve satisfactorily the problems which are pressing for 
solution. 

This report compelled the Carnegie Founda- 
tion to submit to asking the cooperation of the 
American Association of University Professors. 
A commission was appointed containing six rep- 
resentatives of the Carnegie Foundation, two of 
the American Association of University Pro- 
fessors and one each of the Association of Amer- 
ican Universities, the National Association of 
State Universities and the Association of Amer- 
ican Colleges. This commission of course found 
that the foundation was insolvent. For the pres- 
ent group of accepted institutions and teachers, 
the annual cost (if retirement is at sixty-five) 
would ultimately be $2,226,422. The income 
from the endowment of the foundation in 1917 
was $519,862. The commission recommended 



PENSIONS 15 

that the foundation should first meet its exist- 
ing obligations — which it assumed was possible 
through the Carnegie Corporation, to which Mr. 
Carnegie has given $125,000,000 to underwrite 
the foundations that bear his name. It then 
outlined a plan for contributory pensions to 
take the place of the free pensions of the in- 
solvent foundation. 

The executive committee of the Carnegie 
Foundation, headed by President Nicholas Mur- 
ray Butler, has now issued a report. The Car- 
negie Corporation has consented to contribute 
$11,000,000 which will enable the foundation to 
meet about two thirds of the engagements that 
it has already contracted. The pensions pro- 
vided are to be reduced in size, so that ulti- 
mately the professor retiring at the age of sixty- 
five will receive two thirds of the pension prom- 
ised, and less if he has no living wife. It re- 
mains to be seen whether the American Asso- 
ciation of University Professors will accept this 
compromise of the foundation with its creditors. 

At the same time there has been made public 
the proposed charter (since granted) of the 
Teachers' Insurance and Annuity Association of 
America, the incorporators being headed with 
the names of Elihu Root and Nicholas Murray 
Butler. The Carnegie Corporation provides a 
million dollars for capital and surplus and owns 
the stock. It is not a mutual company, but its 
business is to be conducted without profit to it 



16 CABNEGIE 

or its stockholders, and it is said that arrange- 
ments may later be made by which the policy 
holders may participate in the management. 

The plans for insurance and annuities of this 
association are not yet announced, but they are 
foreshadowed by statements of Dr. Pritchett, 
who is on the interlocking directorates of the 
three corporations, and by the commission of 
which also he was a member. It is proposed that 
the association shall write term insurance, ex- 
piring at sixty-five or later, the purchase of 
which is to be optional with the teacher. The 
premiums will be computed on the basis of the 
American Experience Table and 3£ per cent, 
interest. It is then proposed that "the annu- 
itant, or his college, or the two together, will con- 
tract to pay to the association * level' premiums 
of a certain amount each year until the annu- 
itant reaches his sixty-fifth year. ' ' Provision is 
made for repayment in case of death or retire- 
ment. The accumulation will be invested by 
the association and will be converted into an 
annuity on the basis of McClintock's Table and 
4 per cent, interest. The purchase of the an- 
nuity is to be compulsory for all teachers in in- 
stitutions that join in the plan. 6 

6 Most of the state universities have been eager to ob- 
tain the free pensions of the Carnegie Foundation, but it 
is not likely that they will contribute to the purchase of 
annuities for their professors from a private corpora- 
tion. A charming memorandum was submitted by the 



PENSIONS 17 

It is announced that the association will not 
contract for an annuity of any stated amount, 
nor to compound the payments at any stated 
rate of interest, but that the foundation will 
guarantee 4£ per cent. Dr. Pritchett realizes 
the difference, for he says: " Whether the indi- 
vidual participates in insurance or in a deferred 
annuity, he can be secure only when the relation 
is contractual. ' ' This is certainly understood 
by teachers to whom the Carnegie Foundation 
has not paid the length of service pensions which 
it had promised and by those to whom it will not 
pay the old-age pensions which it had promised. 
There are, however, men of business who like to 
believe that their word is as good as their bond. 

Unlike the Carnegie Foundation the new 
scheme has had expert actuarial advice. An as- 
sociation writing life insurance for teachers on 
the basis of the American Experience Table and 

commission to the Carnegie Foundation to the effect that 
"in state-supported institutions of higher education 
whose standards are in conformity with the rules of the 
foundation, such institutions may be admitted to the 
benefit of the new system' ' when the governing board 
approves of the principle of institutional contribution, 
"meanwhile recommending and permitting the eligible 
faculty as a group, to carry the entire burden of neces- 
sary contribution for themselves and on behalf of the 
institution. ' ' It was later also voted that the founda- 
tion should consider extending the same privilege to en- 
dowed institutions. An unusual "benefit" is certainly 
extended to professors in institutions "whose standards 
are in conformity with the rules of the foundation. ' ' 



18 CAENEGIE 

3^ per cent, interest will earn large profits if 
properly managed. Teachers have an expecta- 
tion of life much above that of the American Ex- 
perience Table, and the present rate of interest, 
which is likely to continue or increase, is much 
above 3£ per cent. The association will not con- 
tract to give the insured the benefit of profits 
accruing on account of a higher rate of interest, 
but expects to provide for a distribution of 
bonuses. 

The new association obviously does not offer 
academic teachers anything that they can not 
obtain from the standard companies. It does 
not provide for disability allowances which are 
what is most needed. The association, however, 
has what amounts to an endowment of one mil- 
lion dollars, and is dealing with preferred lives. 
It may be able to divide profits larger than the 
dividends of the mutual companies. This, how- 
ever, is not certain. There are at present 6,593 
teachers in the Carnegie institutions, seventy 
of our more than seven hundred colleges and 
universities. If the association writes 10,000 
policies, it will have an annual subsidy of $5 
for each; if 20,000, it will have $2.50. It may 
be that this amount will not cover the additional 
overhead and agency expenses of a comparatively 
small company, operating in all the states and 
in Canada. The standard companies must main- 
tain agencies, legal departments and medical 
service everywhere, and the cost divided among 



PENSIONS 19 

a million policy holders is obviously much less 
than it would be if the cost of a similar service 
is divided among 10,000 policy holders. 

The question, however, is not financial only, 
or chiefly. The fundamental problem is whether 
it is for the ultimate welfare of academic teach- 
ers to be compelled to purchase annuities in a 
company controlled by university presidents. 
The interest of the university and of its pro- 
fessors should be identical, but this is impossible 
until the professors have some control in the 
university. At present almost every professor 
in every university wants his salary increased; 
the, president sits on the safety valve as long as 
he dares. The professor wants freedom; the 
president has his eye on students, alumni and 
benefactors, and wants a personal machine to 
run the institution. Compulsory retirement on 
an annuity at the age of sixty-five, or at the 
option of the president, especially when the an- 
nuity has been purchased by the professor, may 
work extraordinary hardship to him, and may 
be used to keep him in a condition of servitude. 

Academic teachers are face to face with a dif- 
ficult situation and one vital to them. It is for- 
tunate that they have a well-organized a^nd 
powerful body in the American Association of 
University Professors. This association was 
represented on the commission which drew up 
the plans for the Teachers' Insurance and An- 
nuity Association by two members, selected, 



20 CAENEGIE 

however, for their actuarial knowledge, rather 
than for their interest in academic freedom. 
They were subordinated to four associations rep- 
resenting college and university presidents. The 
Carnegie Foundation has not followed the recom- 
mendations of the commission even though it 
was dominated by Dr. Pritchett and the other 
trustees of the foundation. It has not provided 
for the payment of its existing obligations; it 
will not establish disability pensions; it does 
not permit the American Association of Uni- 
versity Professors to share in the management. 

The problem is now under consideration by 
the representative committee of the American 
Association of University Professors. This 
committee and the teachers of the country may 
accept the plan and seek to guide it in a direc- 
tion that will benefit them and avoid the sub- 
jection of the teacher to the administration. 
Probably this can only be accomplished by abol- 
ishing the compulsory feature and permitting 
the teacher to purchase his insurance, and an 
annuity, if he wants one, in the new association 
or wherever he can do so to the best advantage 
and with the least danger to his freedom of ac- 
tion, of teaching and of research. 

But other plans should be considered now if 
ever, and there are at least two alternatives. 
The teachers might form a mutual company of 
their own or they might unite to secure fa- 
vorable methods and terms from one of the 
standard companies. 



PENSIONS 21 

A mutual company limited to teachers and 
scientific men has always appealed to the present 
writer and he had under constant consideration 
efforts to organize such a company before the ill- 
starred Carnegie Foundation intervened to dis- 
rupt the existing pension policies of our univer- 
sities and the insurance policies of individuals. 
At that time the writer carried life insurance of 
$20,000. He estimates that a company would 
make a clear excess profit of $5,000 on a $20,000 
straight life policy, if the expectation of life of 
a university professor of good heredity and 
habits is five years greater than the average. 

.The company would on the average receive 
the premium payments for five years longer, 
say, $1,500, and if the insured lived five years 
beyond the average age it would have the in- 
terest of $20,000 for five years, say at compound 
interest $5,000. These excess profits of $6,500 
would on the average be reduced somewhat, for, 
while the excess profits on the policies of those 
who died earlier would be in proportion, the ab- 
solute amount would be less. One may, how- 
ever, guess that a company which insures for 
$20,000 a life with an expectation five years be- 
yond the average makes an excess profit in the 
neighborhood of $5,000. A stock company 
would make profits of fifty million dollars by 
insuring 10,000 such lives. 

It is almost certain that college and university 
teachers have an expectation of life beyond the 



22 CABNEGIE 

average, but we do not know how large it is. It 
could readily be determined by a competent act- 
uary, and somewhat comparable data are avail- 
able in the experience of organizations such as 
the Presbyterian Ministers Fund. For its pol- 
icy holders the actual mortality has in recent 
years been less than half the expected mortality. 
According to the data in the writer's "Statis- 
tical Study of American Men of Science' ' the 
death rate of those under fifty from 1904 to 
1910 was about three per thousand as compared 
with an expected mortality of about ten. 

For an insurance company a capital of $100,- 
000 and a surplus of $50,000 are required by the 
New York state laws. If one hundred and fifty 
college teachers and scientific men would form 
a company, each taking a share at $1,000, no one 
being permitted to hold more than one share or 
to transfer his share to any one but a teacher, 
and if such a company wrote insurance for 
teachers on the basis of the American Expe- 
rience Table and 3^ per cent, interest, it would 
with proper management be financially success- 
ful. It might also arrange life insurance and 
annuities more favorable to the independence of 
the teacher than can be expected from an asso- 
ciation controlled by university presidents and 
having ulterior motives. 

For example, Dr Pritchett thinks that life in- 
surance is of no use after the age of sixty-five; 
but some of us even at that age may be con- 



PENSIONS 23 

cerned about our children and our grandchil- 
dren. We may also not care to have our sav- 
ings converted by compulsion into an annuity 
which lapses at death and leaves nothing for 
our heirs. As a psychologist the writer is con- 
cerned with types, and two of those which he 
has proposed are two opposite kinds of men, 
those who take out life insurance and those who 
buy annuities. Ten years ago he wrote to Dr. 
Pritchett : 7 

It appears to me that most healthy-minded men are 
more concerned with provision for their families in case 
of disablement or death than with anxiety as to their 
own old age. I sympathize with those who take out life 
insurance, not with those who buy annuities, and it gives 
me no satisfaction to be put by force of circumstance 
into the latter class. I should like to exchange my 
annuity for life insurance of equal value, and I believe 
that this would be the nearly unanimous preference of 
my colleagues. 

. The Carnegie Foundation adds substantially to the in- 
comes of accepted universities and colleges, but it does 
not greatly assist the individual professor. The pro- 
vision for retirement for age does not help at all in in- 
stitutions that already had a pension system; in other ac- 
cepted institutions the salaries will be adjusted with ref- 
erence to the pension, and the only individuals who 
benefit are some of the older men in institutions without 
a pension system for whom the benefit is retroactive. 
Apart from this group, the benefit to the individual — and 
only until readjustment of salaries takes places — is con- 
fined to the length of service provision, the wisdom of 

7 The correspondence is printed in the issue of Science 
for April 24, 1908. 



24 CAENEGIE 

which is doubtful, and the widow's pension, which only 
applies at the age when it is least needed, and if admin- 
stered as a charity would in the long run be, as you say, 
''sure to harm rather than to help the teacher and the 
cause of education. " 

If the professor must be the Versuchstier of paternal- 
ism, is not the German system — by which he receives his 
salary for life, being relieved from service if disabled 
by illness or old age, and his widow and each of his 
minor children receive a pension — the best plan both for 
the professor and for the university. And, if so, could 
not the Carnegie Foundation bring about this system by 
offering endowments to those institutions that would 
adopt it? 

Probably the form of insurance making the 
strongest appeal to married teachers is the en- 
dowment policy. In a standard company a 
forty-year term endowment policy for $5,000 
can be purchased at the age of thirty for an an- 
nual premium of about $100. If the insured 
dies before the age of seventy his family receives 
the $5,000; otherwise he himself receives that 
amount when he reaches that age. If then he 
has no dependents, or if he has no better use for 
the money, he can convert it into an annuity of 
about $700. As the salary of the teacher in- 
creases he can, if he sees fit, purchase additional 
endowment policies to make his capital at the 
age of seventy, or his annuity if he wants one, 
as large as may be desirable. If he becomes dis- 
abled before the age of seventy, he can obtain 
the accrued value of his policy; or if he con- 
tinues to teach beyond the age of seventy he can 



PENSIONS 25 

buy a larger annuity. This gives the teacher 
much greater freedom in the use of his savings, 
and does not subject him to the whim of the ad- 
ministration, as does the enforced purchase of 
an annuity accruing at the age of sixty-five and 
followed by enforced retirement. 

While a mutual company established and con- 
trolled by teachers would give them greater free- 
dom and more advantages than a stock company 
owned by the Carnegie Corporation, it would 
lack the endowment of one million dollars. The 
Carnegie Corporation may hold that the price 
of a university professor is only five dollars a 
year. It is also the case that a small company 
would have the same excessive cost of adminis- 
tration as the Carnegie scheme. Either com- 
pany, writing insurance on preferred lives on 
the basis of the American Experience Table and 
3J per cent, interest, would be profitable, but 
the dividends might be less than those of the 
standard mutual companies selecting their lives 
by the usual methods. 

To avoid the cost and loss of time inevitable 
in the conduct of a small insurance company, a 
society of teachers might be formed without cap- 
ital that would reinsure the lives of its members 
in one of the standard companies, or one of these 
companies might be shown the desirability of es- 
tablishing a group or department for academic 
teachers. The companies are prevented by law 



26 CAENEGIE 

from giving preferred rates to preferred lives. 
This is a curious social anomaly. Bad risks when 
known must pay a higher premium, but pre- 
ferred lives are given no advantage for their 
better heredity and habits. An actuary once 
said to the writer that preferred lives had to be 
obtained by his company to balance bad risks 
insured unawares. That is to say, university 
professors must pay the premiums of those who 
fall into intemperance or contract venereal dis- 
ease. Even when professions are equally useful 
to society, there appears to be no reason why 
teachers should pay the premiums of physicians, 
whose expectation of life is probably five years 
less. 

The problem would perhaps receive the best 
solution if one of the great mutual companies 
would consent to form a department for teach- 
ers and keep their insurance premiums in a 
separate account, paying back the dividends 
that were earned by the group. Teachers would 
earn the higher rate of interest which money 
now pays and would in addition obtain insur- 
ance at the rate warranted by their greater ex- 
pectation of life. They would be free from the 
control of the Carnegie-Pritchett-Butler com- 
bination. 

The question is of vital importance for the 
welfare of teachers and for the future of our 
colleges and universities. It should receive care- 



PENSIONS 27 

ful consideration while it is still open. The mag- 
nitude of the problem is enhanced by the fact 
that it concerns closely the pension systems of 
public schools, and indeed all professional, in- 
dustrial and governmental life insurance, dis- 
ability allowances and old-age pensions. 



THE " POLICIES " OF THE CARNEGIE 
COMPANY* 

The article on "Life Insurance and Annui- 
ties for Academic Teachers/' printed in the 
issue of School and Society for November 9, was 
sent to a number of college and university pro- 
fessors, with the request for an expression of 
opinion on the subject. Those to whom the ar- 
ticle was sent were selected to represent dif- 
ferent subjects and institutions, without ref- 
erence to the writer's acquaintance with them 
or knowledge of their views. They were asked 
to check one of the three statements here repro- 
duced, the number of the votes for each 2 being 
as shown. 

The plans of the Carnegie Foundation for life in- 
surance and annuities seem to be satisfactory .... 13 

It seems to be desirable to consider alternative plans 
under the control of the teachers concerned 636 

The recipient is not prepared to express an opinion 
at the present times 104 

i Printed in School and Society, January 4, 1919. This 
name is used for brevity and accuracy. The Carnegie- 
Pritchett Company is certainly not what it calls itself, 
a "Teachers Association. ' ' We thus have three inter- 
locked concerns — The Carnegie Corporation, with a capi- 
tal of $125,000,000; The Carnegie Foundation, now in- 
solvent, and the Carnegie Company, with a capital of 
$1,000,000. 

2 There were six mixed ballots. 

s A large part of those who are not prepared to express 

28 



PENSIONS 29 

The Carnegie Foundation certainly received 
an unlucky vote; 636 to 13 is a majority not 
often recorded. Indeed an almost incredible 
situation has arisen, for the Carnegie Company 
claims to have been established for the benefit of 
exactly those who state by a majority of fifty to 
one that its plans are unsatisfactory. We are 
told by the management that the company is 
"the concrete embodiment of those principles, 
as finally reached with the cooperation of the 
teachers in the institutions associated with the 
Foundation and of representative academic and 
actuarial societies," but the teachers repudiate 
"those principles' ' with an emphasis of combined 
opinion approaching unanimity. 

In addition to the vote, about two hundred 
letters have been received, some of them brief 
notes, others detailed discussions of the situa- 
tion. If all of us had as much money to spend 
on printing as the Carnegie Foundation, it might 
be desirable to reproduce the letters. It is, 
however, only possible to print some of them in 
full or brief extracts from all of them. The 
latter plan has been followed, extracts being 
quoted from each letter that expresses any opin- 

an opinion between the two alternatives and at the same 
time write letters of explanation state that they are op- 
posed to the Carnegie Foundation scheme, but also object 
to plans under the control of teachers, because they do 
not trust the business qualifications of their colleagues 
or because they regard the existing companies as ade- 
quate. 

3 



30 CABNEGIE 

ion. The most definite and striking sentence or 
paragraph has been selected and this does not 
always represent the entire viewpoint of a letter ; 
but the extracts taken together give a correct 
and impressive exhibit of the consensus of opin- 
ion of college and university professors. The 
names of the individual writers are immaterial, 
for we are concerned only with the group, and 
the same reasons which make a secret ballot es- 
sential to a democracy lead to the withholding 
of the names. Most of the writers would doubt- 
less have pleasure in giving their names and 
showing their complete letters to officers of the 
foundation. The extracts here printed are from 
all letters received prior to December 1. Many 
others have since been received, extracts from 
which will be printed later. 

The new Carnegie Foundation plan seems to me prom- 
ising, because I believe that in principle some contribu- 
tion by beneficiaries should be made, and believe further 
that this contribution should be compulsory, or at least 
unfailing. 

I should have to depend upon the testimony of actu- 
aries as to the new proposition, and they seem to think 
that is the best way out of the difficulty. 

It seems to me that Mr. Carnegie 's gift horse has been 
looked too critically in the mouth. 

I believe in the idea of getting a better plan from the 
Carnegie Foundation, if possible. 

I have read your article with great interest and gen- 
eral sympathy. While I do not regard the plan of the 
Foundation as entirely satisfactory, I do not wish to be 



PENSIONS 31 

thought to be expressing an opinion that it is unsatisfac- 
tory faute de mieux. 

My present view is that alternative plans should be 
considered, and particularly the plan which you advo- 
cate of placing the whole matter of insurance under the 
control of the teachers concerned. Nevertheless, I still 
am rather of the opinion that the insurance of college 
teachers should not be absolutely divorced from the 
Carnegie Foundation. 

Existing insurance companies are sufficient. 

Of the two plans proposed, I regard the second as 

preferable, but neither as desirable. 
» 
I believe that professors through an authorized agent 

should inaugurate an insurance system, but that it should 
be managed and controlled by a reputable insurance com- 
pany. 

My position is that we should act through the Ameri- 
can Association of University Professors. 

The advantage of unanimous action as presumably rep- 
resenting the profession is not to be neglected. 

My impression is that a joint scheme is preferable. 

Not sure teachers concerned could control or adminis- 
trate fund, but thank you for keeping up the agitation 
and showing status from time to time. 

Personally, I would not care to have anything to do 
with either plan. In the interest of the younger men in 
the teaching profession I consider the second as much 
preferable and have therefore marked my assent to it. 

I do not favor compulsory insurance. 

I am not in favor of any plan of compulsory insurance. 

Even if it should not prove feasible to carry through 
any of the proposals outlined in your article in School 
and Society, I should think it better for a university 



32 CAENEGIE 

teacher to go to one of the old-line companies and pay 
the regular rates, rather than to entrust his fortunes and 
those of his family to the trustees of the Carnegie Foun- 
dation. 

, I have long since lost interest in the doings of the Car- 
negie Institution. I hope my plans to be absolutely in- 
dependent of any expectations from their fund will not 
miscarry. 

I no longer have any interest or confidence in the 
Foundation and have thought only of depending on com- 
mercial insurance companies. 

Sometimes I think it would be well to go in with them, 
and sometimes I feel that there is no use of putting good 
money after bad in the hands of dishonest people. 

If the Carnegie Foundation wishes to help the financial 
status of university professors, surely the best plan is 
one, often mentioned by you, of so endowing universities 
that they may make the salaries of their professors for 
life, with suitable provisions for widows or dependents. 

Your article is both able and interesting. But quite 
independently of it, I should consider it better judgment 
to invest in a regular insurance company consisting of 
business men, rather than in an amateur organization 
which dabbles in insurance. 

The teachers concerned should have some control of 
the provisions which are to be made. 

I should certainly be glad to join any real professors' 
insurance scheme. 

I have no hesitation whatsoever in joining you in the 
statement that alternative plans certainly should be con- 
sidered and in my judgment these ought to be under the 
control of teachers. 

I don't care for any protection after I am sixty-five. 
If I have health up to that time, I shall provide for 



PENSIONS 33 

myself and if I can not I am not worth being provided 
for except possibly by pauper agencies. What I want is 
a little protection against the nightmare of disability 
during the years I am struggling to make way in a pro- 
fession where advancement comes slowly and where the 
founding of a family is a bitter struggle. 

Buying insurance in the regular markets would have 
the added value of being left to the free choice of the 
purchaser. Such a scheme would have a further advan- 
tage of removing any tendency of thought or policy con- 
trol by an outside institution such as the Carnegie Foun- 
dation or any of the proposed substitutes. 

I resigned my professorship last June. After eighteen 
years in service I found that I must better provide for 
the present and future welfare of my family. I believe 
that the Carnegie Foundation has shown poor manage- 
ment by inexcusably undertaking a plan that it can not 
fulfill. " 

Teachers like all other people should be free to take 
or not take insurance — and by any method they please — 
without advice from others unless the advice is requested. 

You certainly deserve the thanks of the academic 
world for persisting in the good work. Whether enough 
money can be found among our poor professors to or- 
ganize a mutual stock company, I know not. 

If institutions are prepared to pay pensions as a mat- 
ter of right — as compensation for inadequate pay on ac- 
tive service — well and good. Otherwise the matter would 
better be left to the individual in my opinion — or to a 
voluntary association of the individuals. 

I would like to make my vote stronger. 

No compulsion of any sort. 

Most desirable to consider alternative plans. 

Thank you for this clear and forceful discussion. Will 



34 CAENEGIE 

be glad if I can ever render any assistance along these 
lines. 

It seems to me that the problem is very clearly put and 
analyzed. 

I heartily agree with you that the conditions are very 
undesirable. 

The mistake is to compel retirement at sixty-five. The 
proportion of men doing good work up to seventy-five or 
even later is very considerable among scientific men and 
scholars. 

If college teachers are to be pensioned the inevitable 
tendency will be for salaries to remain low. With low 
salaries college teachers have slight freedom and limited 
influence. 

On what ground do the present trustees insist on 
standing between Mr. Carnegie and the profession he 
planned to serve? We now have the agency that may 
relieve them of their burdens. 

It is absurd that a foundation for the advancement of 
teaching should put a premium on the exploitation of 
teachers by selfish executives. But the teacher 's problem 
is bigger than any question of pensions and, instead of 
wasting much time on the Carnegie Foundation, I think 
we should make its benefits, if they are such, negligible 
by a concerted effort: (1) to protect the older men and 
women now employed, (2) to encourage younger persons 
of promise in the profession to get out of it, and (3) to 
bring every effort to bear upon those who are not yet in 
it to keep out of it until teachers all the way from the 
kindergarten to the universities are paid a salary con- 
sistent with financial self-respect. 

I have always resented the scheme as a kind of char- 
ity and I do not think that charity is a good principle, 
but I believe firmly that professorial positions should be 



PENSIONS 35 

for life; that the professors should be relieved of teach- 
ing only in case of disability regardless of their age, and 
that either the institutions employing the professors or 
the whole nation should pay in case of such disability 
due to sickness, accident or advanced age. 

I have been watching with much interest your fight 
for a democratic government in educational institutions. 
It seems to me that in these days when we are talking 
much of "world democracy," that you are justified in 
advocating a measure of "educational democracy." 

Our president and board of regents have always been 
wary of being dominated by an educational taskmaster. 
Personally, I have no inclination to take advantage of 
their plan, since I can discover no guarantee that this 
venture will have any more success than the former one. 
It seems to me to be highly desirable to form a company 
in which teachers could profit by sound management and 
yet not pay the excessive costs of advertising and solici- 
tation. 

It seems to me the teaching profession should be inde- 
pendent from any close corporation. In other words we 
should have democracy in education and a freedom to 
express our opinion on educational matters. I do not see 
how a state institution could be independent if it were 
attached to the Carnegie Foundation. 

Guarantee of College and University Professors: (1) 
Much higher salaries to attract more men of ability to 
the profession. (2) Life tenure or during mental and 
physical ability to perform his duties. (3) Protection 
against disability at any and all times and at any age. 
(4) Protection for widow and minor children at any 
time. 

I favor keeping clear of the Carnegie plans. 

With good and fervent wishes for the success of your 
efforts. 



36 CAENEGIE 

One thing is clear — that the plans of the Carnegie 
Foundation are unsatisfactory and untrustworthy . 

It seems evident that the Carnegie Foundation has 
failed, and I doubt if I could ever be prevailed upon to 
contribute any part of my small salary to such manage- 
ment as the Foundation has enjoyed. In fact I came to 
the decision some time ago that I should never subscribe 
to compulsory insurance of any sort, even if by so re- 
fusing, I found it necessary to seek another profession. 

The American Association of University Professors 
should not wait another day to voice its radical dissent 
from the views of President Pritchett and his associates, 
and to repudiate the Foundation both as an organ of 
public charity and of educational influence. 

I have heard many unfavorable criticisms of the Car- 
negie scheme which have created a feeling of distrust in 
my mind towards the scheme, but the basis of the criti- 
cism has never been clear to me until I read your article. 
I welcome the enlightenment and guidance which it 
brings. 

I have long since lost confidence in the Carnegie Foun- 
dation and last week increased my life insurance to the 
limit I feel able to carry. 

College teachers are said to be poor financiers, but I do 
not think the Carnegie Foundation Trustees can hand 
them much. It would be unspeakable to be compelled to 
entrust one's insurance to them. 

Any scheme of insurance, annuities, pensions or what 
not that is not based upon the wholly voluntary support 
of those presumably to be benefited should be rejected 
by self-respecting citizens. 

You have made a real contribution to the cause and 
problem of teacher's insurance. I think the time has 
come for the college men to take up in earnest this vital 
interest of the guild. 



PENSIONS 37 

I am in full sympathy with your sharp criticism of the 
Carnegie Foundation administration. 

With best wishes for strength and skill to your right 
arm in your struggle for academic democracy. 

I am in hearty accord with your article on the Car- 
negie Foundation, as well as with your views on other 
subjects as far as I have heard them expressed. 

Your suggestion seems to cover the ground exactly. 
Certainly the less we have to do with a quasi-charitable 
organization the better. 

I have followed your articles from the first and always 
agreed. 

» Allow me to express my sincere thanks for the stand 
you have taken and are taking against the subjugation 
of teachers and investigators. If the present unfortunate 
conditions both intellectually and financially are not soon 
ameliorated, the professions mentioned will inevitably be 
avoided by all self-respecting men of ability. 

I want to insure where I can get the best treatment 
which does not seem to be what you name the C — P — B 
combination; and I like independence and propose to 
keep it even if I have to get out of teaching. 

I am beginning to think that any salary, any pension 
is good enough for men who will put up with the treat- 
ment professors do put up with in the matter of both 
salaries and discipline. 

I know the Carnegie Foundation has made an utter 
failure of the work entrusted to it and that it should be 
reorganized or go out of business. 

I had not, until I read your admirable article, per- 
ceived the relation between the proposed annuity-insur- 
ance scheme and the control of college professors by 
trustees and presidents. I was, and am still more 
strongly, since reading your article, opposed to the Car- 
negie Foundation scheme. 



38 CABNEGIE 

I want to thank you for this admirable critique of a 
condition of affairs that concerns all of us. I have for 
years followed your independent attitude on this and on 
many subjects. While, of course, not always in agree- 
ment upon smaller matters, may I none the less take this 
occasion to express my substantial agreement with you 
and admiration for your courage? 

I hope it may be possible to get the benefit of insur- 
ance and endowment free from the Prussian control you 
are so valiantly denouncing. 

I am convinced that it is necessary for the teachers to 
take positive action by way of defense against the de- 
signs of the Carnegie Foundation. We should never con- 
sent to any scheme of pensions except one formed on the 
mutual plan and under the complete control of the teach- 
ers themselves. 

You and Professor Jastrow deserve our thanks for 
your careful analyses (moral as well as financial) of the 
mismanagement of the C. P. 

In my opinion the Foundation has failed utterly to do 
that for which it was founded. I don't care to express 
any opinion as to the incompetence or dishonesty of those 
who have been managing it, but I can 't see how they can 
escape one charge or the other. 

What is needed is another foundation whose integrity, 
wisdom and financial stability renders it like Caesar's 
wife. I hope that your activities in this field will bear 
fruit positive. 

So far as actually losing money is concerned, I pre- 
sume the Carnegie Flounderation has escaped; but why a 
concern so conspicuously ill-managed, as regards the main 
purpose for which it was publicly declared to be founded, 
should expect to command the confidence and respect of 
trustees and faculties of American colleges, I can not see. 
Its il scraps of paper' ' are vander lipped away in a man- 
ner f first understood in Prussia. 



PENSIONS 39 

I have always been unalterably opposed to both the 
principle and practise of the Carnegie Foundation pen- 
sion fund for academic teachers. The whole plan has 
always appealed to me as a kind of mortgage upon the 
energies and 'ambitions of the young teacher at usurious 
rates of interest. 

It is my opinion that the proper course to pursue is, if 
possible, to put the affairs of the foundation in the hands 
of a receiver; let this receiver meet the existing obliga- 
tions of the foundation so far as the funds will allow, and 
go out of business. 

Of course no new chains must be forged for the aca- 
demic profession; the old ones are bad enough. 

I entirely agree with you that the Carnegie system was 
one which was fraught with the greatest danger to free- 
dom of thought and the development of the social sci- 
ences. I am glad that it was so poorly planned that its 
failure is assured. 

It has always been a mystery to me that every single 
teacher in private conversation sympathizes with your 
point of view while very few of them dare openly react 
against the continued humiliation inflicted upon our pro- 
fession. . . . Carnegie plus our academic system of ad- 
ministration has broken our back-bones. 

I have no sympathy with the methods of "The Car- 
negie Foundation for the Control of Teaching ,, (and 
teachers), because it has been so repeatedly shown that 
they were based on incomplete data, bad logic, and inex- 
pert specialists, even if they were not tricky or worse. 

The whole business is an insult to the intelligence of 
the teaching profession — an excuse for keeping capable 
men on starvation salaries during their productive years 
in the vain hope of having their declining years provided 
for by charity — an excuse for universities to discontinue 
retiring allowances for honorable service. 



40 CAENEGIE 

The plan proposed is unsatisfactory. My impression 
is that professors have no confidence in the Pritchett- 
Butler gang, and feel that the sooner the Carnegie Foun- 
dation is rid of this incubus the better. 

The great calamity befalling professors in recent years 
was the giving of the Carnegie millions. Would that he 
had kept them. 

It's just as necessary to human freedom to shatter the 
educational autocracies as it is to blow up those of a 
political sort. 

The parallel with the German situation is obvious. 
But I suspect that the Kaiser will surrender before 
Pritchett. There is less excuse for the latter to hang on. 

It is going to be hard enough to teach in an American 
university and retain one's self respect apart from the 
activities of this Foundation. What I think we ought to 
do is to utterly ignore the Carnegie Foundation, and all 
its works. Moreover we should make it clear that we do 
so because it has brazenly disregarded all its promises, 
and because its only apparent raison d'etre is to exercise 
an external, non-academic control over the souls of Amer- 
ican university teachers. 

Words can scarcely be framed to express the criminal 
and selfish culpability of the trustees of the Foundation. 
This, however, is only one of the many symptoms of the 
disease affecting our colleges, namely * * presidentitis. ' ' 

The original Carnegie Pension Foundation, as worked 
out by the board, is scandalous and the new scheme ap- 
peals to me as even worse. 

The conduct of the Carnegie Foundation has been an 
insult to the intelligence and an affront to the integrity 
of the teaching profession. 

These statements are so clear and direct that 
comment is not required. Of the eighty-eight 



PENSIONS 41 

letters only one is mildly favorable to the Car- 
negie Foundation and its ways, three or four 
are exculpatory, the great majority are severe 
arraignments. The letters also show widespread 
discontent with the position of the professor in 
the American university. This is even more the 
case in the full letters than in the extracts which 
have been selected with special reference to the 
Carnegie plans. The situation seems to have 
become worse, or better understood, since the 
present writer published in 1913 three hundred 
letters on the subject in his book on "University 
Control." 

The "Handbook of Life Insurance and An- 
nuity Policies for Teachers' ' has now been pub- 
lished by the ' ' Teachers Insurance and Annuity 
Association of America," and articles of eluci- 
dation and edification have appeared by the 
president of the Carnegie Foundation and of 
the new company in the Atlantic Monthly, 4 and 
by the secretary of the two corporations in 
President Butler's Educational Review. 

The "Handbook" is obviously from the hand 
of the same Mr. Pecksniff who has produced the 
unlucky thirteen annual reports of the president 

* Conducted by Dr. Pritchett '$ fellow trustee in the 
control of the New York Evening Post under the owner- 
ship of Mr. Lamont, of J. P. Morgan and Company, and 
a trustee of the Carnegie Company. Shall we now find 
in the Post the vigorous criticisms of the Carnegie Foun- 
dation which appeared there when it was controlled by 
Mr. Villard and when Dr. Franklin was one of the 
editors? 



42 CABNEGIE 

of the Carnegie Foundation. We are told : 

The teacher whose retirement allowance is secured by 
a Deferred Annuity policy on the Teachers Eetirement 
Plan will enjoy a protection fundamentally more secure 
and equitable than one whose reliance must be upon a 
pension payable at the discretion of a Board of Regents 
or of Trustees. 

A Non-forfeitable Pension 

Prom the moment the first premium is paid on such a 
policy, the teacher will become the owner of a policy or 
contract which neither his employer nor the Association 
will have any power to modify adversely to his interests, 
etc. 

Dr. Pritchett actually informs us that we can 
trust his new company because the laws will 
compel it to keep its contracts, whereas it is 
within the discretion of regents or trustees to 
keep their promises, which they are liable to 
modify adversely to the interests of the teacher. 
This has in fact been done by the trustees of the 
Carnegie Foundation and of Columbia Univer- 
sity; but surely boards of regents and trustees 
usually follow the ordinary standards of busi- 
ness honor. It has besides not yet been decided 
by the courts that a promise in dependence on 
which a teacher has acted is not a contract. 

The Carnegie Company says it is "created 
not to get but to give, ' ' therefore : 

Its policies, further, will be free from any speculative 
element; they wiU be what is called non-participating. 

The consideration shown to the teacher in free- 
ing him from the "speculative element" of re- 



PENSIONS 43 

ceiving the dividends earned by his excess pay- 
ments on his policy is truly Pritchettarian. 

The company increases its rates by 11.11 per 
cent, in case the policy holder is no longer em- 
ployed by a college or university. The ' ' Hand- 
book" says: 

For technical reasons, it seems best to accomplish the 
same result by adding a small percentage to the net 
premium rates and providing for a reduction on each 
premium paid while the policy-holder remains a member 
of the profession. 

The " technical reasons" are to evade the dis- 
crimination laws which provide that no com- 
pany " shall make or permit any discrimination 
between individuals of the same class or of equal 
expectation of life in the amount of payment 
or the return of premiums or rates charged for 
policies of insurance.' ' The expedient seems 
to be of somewhat doubtful legality. The ob- 
ject, of course, is to make it harder for a teacher 
to escape from an undesirable position. 

It is not necessary to describe in detail the 
policies offered by the Carnegie Company for 
its "Handbook" has been widely distributed 
and can be obtained on application. They are 
similar to those of the standard companies (ex- 
cept the undesirable features of its deferred an- 
nuity), and, what is truly surprising, the 
charges are also the same. The "Handbook" 
says of the new company : 

Its situation is quite different from that of the solicit- 



44 



CAENEGIE 



ing company. Through an endowment, contributed in the 
form of capital and surplus, it is able to offer insurance 
at cost, without overhead charges which in the ordinary 
company absorb a considerable proportion of the 
premiums paid by the policy-holders. 

It is further said : 

It is believed that college teachers are subject to lower 
rates than ordinary holders of insurance and that in time 
this should result in a lowering of the cost of insurance 
for a group composed of such teachers. 

After reading this and much more to the ef- 
fect, the teacher will be interested in the follow- 
ing comparison with the rates of the two largest 
American companies, both mutual (owned by 
the policy holders and returning the profits in 
dividends), and a standard non-participating 
company. 

PREMIUMS FOR $1,000 INSURANCE AT AGE 35 



Company 



Carnegie Company: 

Teachers 

Escaped teachers. 

Prudential 6 

Metropolitan 6 

Travelers 



Ordinary 


20-Year 


Life 


Term 6 


20.19 


27.57 


22.41 


30.60 


21.90 


29.76 


22.00 7 


29.76 


20.11 


27.67 



30-Year 
Endowment 



26.59 
29.51 
28.02 
28.02 
26.84 



s The term policies of the Carnegie Company are par- 
ticularly undesirable for the teacher, because they do 
not contain the usual provision permitting renewal 
without a medical examination. 

e The rates quoted for the Prudential and Metropoli- 
tan will be reduced by the payment of dividends. 

7 Endowment at age 85. 



PENSIONS 45 

THE ANNUITY (MALE) PURCHASED BY $1,000 AT AGE 65 

Carnegie Company $113,248 

Prudential 112.619 

Metropolitan 116.929 

Travelers 115.149 



No reference is made in the "Handbook" as 
to what will be done with the large surplus that 
will undoubtedly accumulate at the rates 
charged by the company ; but the charter reads : 

The purpose of the corporation is ... to conduct its 
business without profit to the corporation or to its stock- 
holders; and the corporation shall transact its business 
exclusively upon a non-mutual basis and shall issue only 
non-participating policies. 

The trustees of the Carnegie Corporation can 
not divide the profits among themselves (except 
by salaries such as the Hughes insurance inves- 
tigation disclosed), but they can use it for the 
further control of teachers. 

The only adequate reason why a teacher 
should purchase life insurance or an annuity in 
the Carnegie Company is because he is com- 
pelled to do so by the institution which employs 
him. The deferred annuities, which are the real 
raison d'etre of the company, are particularly 
adverse to the interests of the teacher. The joint 
commission, on which representatives of the 
American Association of University Professors 
came to an agreement with Dr. Pritchett, adopted 
the following provision: 

s Payable monthly. 
9 Payable annually. 

4 



46 CABNEGIE 

The association will contract that if the annuitant re- 
tires from the profession of teaching prior to the age of 
sixty-five, it will return to the annuitant the premiums 
that have been paid to the association by the annuitant 
alone (or by the annuitant and his college), prior to his 
retirement, with compound interest at the rate of 3 J per 
cent. 

This right is now withdrawn and the teacher 
once caught in the net of the company is there 
for life. 10 Yet we tell our students that slavery 
has been abolished in the United States. 

The control of the professor's freedom of ac- 
tion and of thought is so disastrous that the 
financial clipping to which he is inured is trivial 
in comparison. It may, however, be noted that 
the joint commission decided that the founda- 
tion should guarantee four and one half per 
cent, interest on the annuity payments, and that 
this is now reduced to four per cent. No pro- 
vision is made for insurance against disability. 
The usual medical examination and statements 
concerning physical condition, etc., are required. 

10 The Carnegie Company also ignores the recommenda- 
tion of the joint commission that all possible considera- 
tion be given to the needs of older teachers who enter 
the system. If a man does so at the age of sixty, he 
would have to pay over $5,000 a year to obtain an 
annuity of $2,500 at the age of sixty-five. If Columbia 
University requires all its professors to purchase de- 
ferred annuities and the University of Chicago retains 
its pension system, how can a professor go from Chicago 
to Columbia? 



PENSIONS 47 

The " Handbook' ' however, offers the following 
notable privilege: 

No physical examination is required if the application 
is for a deferred annuity, or for a life annuity. 

In fact the teacher who had paid premiums 
for thirty years and on reaching the age of sixty- 
four finds that he is suffering from Bright 's dis- 
ease or cancer, not only is not required to take 
a physical examination, but the company is so 
considerate of his interests as to compel him to 
purchase the annuity. If the teacher takes out 
an endowment policy in a standard company, 
he can, of course, obtain the accrued value of 
his policy (after three years in some companies) 
and on reaching the age of sixty-five he can pur- 
chase an annuity or use the money in any other 
way that he sees fit. 

An inexplicable provision of the deferred an- 
nuity of the Carnegie Company is that it unites 
a queer form of life insurance with the annuity. 
If the annuitized teacher dies before the pay- 
ment of his annuity begins, the premiums with 
interest are paid to his heirs in 120 monthly in- 
stallments. The teacher is, of course, compelled 
to pay for this insurance at the regular rates. 
It is the most undesirable insurance possible, 
for it is least when most needed and most when 
least needed. If the ordinary $10-a-month pros- 
pective annuitant dies at the end of the first 
year, when he may leave a wife with young 



48 CAENEGIE 

children, they will receive $1.02 per month for 
ten years. After forty years of payment the 
accumulation amounts to $11,649. X1 

The reverse form of policy would be useful — 
the writer does not understand why it is not of- 
fered — in which the premium is constant through 
life and the proceeds decrease each year with 
decreased need and the increased chances of 
death. Thus if $120 were paid annually (and 
there were no expenses) the family of the in- 
sured should receive about $30,000 if he died 12 
at the age of 25, $20,000 at 35, $10,000 at 45, 
$5,000 at 55 and $2,500 at 65. 

A teacher with a dependent wife and young 
children should insure his life for a sum that 
will yield at least one half the income that he 
earns. This is usually possible by the purchase 
of term insurance ; but it can not be done in the 
Carnegie Company which limits its policies to 
$10,000, although it provides for the sale of an- 
nuities of the capital value of $50,000 to 
$100,000. It is further the case that if a teacher 
is forced to purchase an annuity, he will find it 

ii If the teacher invests his own money and its interest 
in government bonds it will amount to a much larger 
sum after forty years and will in the meanwhile be de- 
cidedly safer. But he will lose the " privilege ' ' of be- 
ing forced to purchase an annuity with it, whether he 
wants one or not. 

is The chances being about 4 in 1,000 for the general 
population; the amount of insurance for the teacher 
should be at least 50 per cent. more. 



PENSIONS 49 

by no means easy to purchase life insurance. In 
advocating the plan that educational institutions 
shall require the purchase of deferred annuities, 
leaving life insurance optional and even making 
it difficult, the Carnegie Foundation does what 
it can to cultivate in the young teacher a selfish 
and even an anti-social attitude. The entire 
scheme is arranged to enable the administration 
to drop older teachers when it no longer wants 
them! 

According to the plan of the Carnegie Foun- 
dation and the Carnegie Company, teachers 
above the rank of instructor in associated insti- 
tutions are to be compelled to purchase de- 
ferred annuities to the extent of 10 per cent, of 
their salaries, 5 per cent, to be deducted from 
the salary and 5 per cent, to be paid by the in- 
stitution. It should be clearly understood that 
the 5 per cent, paid by the institution will be 
deducted from future increase in salary. When 
this was first stated by the present writer in 
1908, it was denied by Dr. Pritchett, but he has 
learned it in the course of his education, to 
which he so frequently refers in his reports and 
articles. Thus the "Handbook" says: 

Teachers who have followed the discussion of pensions 
during recent years will understand that the contribu- 
tion made by a college or university to a teacher's an- 
nuity will inevitably in the course of time be considered 
as a part of his salary. This result must always follow 
on any such arrangement between two parties who have 
to each other the relation of employer and employee. 



50 CARNEGIE 

There is at the present time imminent danger 
that the management of colleges and universi- 
ties, in torder to annuitize their teachers and 
thus provide for dismissing them at sixty-five 
and holding them in more complete subjection 
in the meanwhile, will persuade them to accept 
the annuity system on the ground that it will 
provide an immediate five per cent, increase in 
salary, although according to the present value 
of the dollars in which salaries are paid an inn 
crease of more than 50 per cent, is now over- 
due. The example will probably be set by such 
institutions as Columbia, Harvard and Yale, 
whose presidents are trustees of the foundation 
and have assisted in framing the scheme. Teach- 
ers may even be told that unless they accept the 
plan, their institution will no longer be asso- 
ciated with the foundation and their older col- 
leagues will be deprived of the pensions now 
promised by the foundation. It is perhaps to 
prepare us for the contingency that the founda- 
tion will once more do away with what it calls 
"the expectations" (i. e., expectations that the 
foundation will keep its promises) of teachers, 
that Dr. Pritchett so frequently reminds us, to 
quote again from the "Handbook," that: 

i No arrangement for such retirement will be satisfac- 
tory to either the college or to the teacher except one 
that has the definiteness and security of a contract. 

The standard companies seem to be in every 
way preferable to the Carnegie Company. They 



PENSIONS 51 

have the advantage of reliability with no like- 
lihood of interference with the freedom of the 
teacher. The difficulty is that the cost is greater 
with them, as it is with the Carnegie Company, 
than the teacher should be compelled to pay. 
The premiums for insurance are based on the 
American Experience Table, three and one half 
per cent, interest and a loading for expenses. 
The death rate of professors under fifty is less 
than half that of the American Experience 
Table and probably twenty per cent, less than 
the average of accepted risks. Interest is now 
much higher than three and one half per cent. 
The expenses of the standard companies are 
over twenty per cent, of the premiums received 
and are largely due to the cost of obtaining busi- 
ness, which is an added charge to those who do 
not require solicitation. Perhaps a professor of 
good heredity and habits pays twice the net 
value of his insurance. 

Thus to take a case where the conditions are 
the simplest, in England (where vital statistics 
are properly compiled) the death rate between 
the ages of 25 and 35 is 4.5 per thousand. To 
secure $1,000 insurance (apart from costs) it 
should be necessary to pay only $4.50 a year. 
But this is for the general population, inclu- 
ding defectives and criminals, drunkards', those 
with syphilis, tuberculosis and all sorts of dis- 
eases that would disqualify for academic posi- 
tions; it includes the submerged classes, those 



52 CAENEGIE 

exposed to excessive hours of labor and abnormal 
risks, those improperly fed, clothed and housed, 
without education or decent medical attendance. 

It is unscientific to make guesses concerning 
quantitative relations, but it seems probable that 
the annual death rate of academic teachers be- 
tween the ages of 25 and 35 is not more than 3 
per thousand, and after a medical examination 
it may be not more than 2. They ought to pay 
(if costs of management are excluded) $2 to $3 
per $1,000 of insurance. But the Carnegie Com- 
pany charges $8.21, or $9.12 to escaped teachers. 
It is also the case that the death rate is lower 
at the beginning than at the end of the ten-year 
period and the company earns a considerable 
sum in interest. If the company should insure 
ten thousand teachers and ex-teachers for an 
average of $10,000 at an average rate of $8.50 
per thousand they would pay it $850,000 a year 
and it would return to them $200,000 to $300,- 
000. As the Carnegie is not a mutual company, 
it is not clear where these profits would go ; but 
it is certain that it is not the company which 
confers the benefit. 

The greater expectation of life which the pro- 
fessor is assumed to have reverses the situation 
in the case of annuities; but the annuitants 
used in the McClintock tables have also an ex- 
pectation of life beyond the average, for those 
do not buy annuities who foresee an early death. 
It is also the case that the lower death rate of 



PENSIONS 53 

professors is greater at earlier than at later ages. 
The duration of life after seventy depends chiefly 
on original constitution or heredity; the death 
rate under fifty is influenced largely by eco- 
nomic situation, habits, exposure to risks and 
.the like, in regard to which the professor is favor- 
ably placed. If all teachers are forced by their 
institutions to purchase deferred annuities, and 
only acceptable risks are insured, the Carnegie 
Compfany gets them coming and gets them going. 
The teacher, like the industrial worker, passes 
through an economic life cycle. He must be 
supported in childhood and should be supported 
until he completes his education. Teachers who 
find employment in one of the Carnegie institu- 
tions receive an average salary of $1,200 at the 
age of 28, which is the average age of marriage. 
However prosperous a married man of twenty- 
eight, maintaining the standards of a university 
teacher, may be on a salary of $1,200 — the 
wages and board of two domestic servants now 
amount to about $1,600 — he is better off eco- 
nomically than he will be later, if he has chil- 
dren to support. He will have a salary of $1,700 
at the age of 35, and $500 will not feed and 
clothe two or three children. If the children are 
properly educated, their cost increases more 
rapidly than the salary of their father, even if 
he is promoted in a Carnegie institution. It is 
not until the children become self-supporting 
and the father is in the fifties with a salary of 



54 CABNEGIE 

$3,000 that his economic situation improves 
somewhat. His salary will not thereafter in- 
crease appreciably; but he may no longer sup- 
port dependent children. In the Carnegie insti- 
tutions he is liable to be turned off at sixty-five 
with about half salary, now decreased through 
the inability of the foundation to keep its 
promises. 

Wealth should be distributed with reference 
to both service and need; some method must be 
found to equalize the inequalities that occur dur- 
ing the life of an individual. Children are no 
longer an economic asset to their parents, least 
of all in the educated classes; neither can the 
employer of the father be expected to pay for 
them. But children are of greater economic 
value than ever before to the state ; the children 
of the academic class are probably of an aver- 
age economic value of over $100,000, in that 
they produce during their lives that much wealth 
beyond what they consume. Ultimately the 
state will pay for the bearing, the rearing and 
the education of its children. In the meanwhile 
we face a difficult situation. It is met by the 
teacher in large measure by not having the 
children, his average family being about 1.5. 
But this is a method undesirable for the indi- 
vidual, disastrous to the state. 13 

13 The economic inequality of the life cycle has been 
made greater in a curious way by increased longevity. 
When the parents died at the average age of fifty their 



PENSIONS 55 

As the dependent child must ultimately be 
cared for by the state, so the disabled worker 
should be supported by the state. The risk of 
prolonged incapacity during the working period 
is extremely small and the cost of insurance 
should be correspondingly low. But the risk, 
though remote, is a constant menace to the un- 
derpaid teacher. The Carnegie Company, in 
not providing for insurance against it, makes 
an exhibit of permanent incapacity on its part. 
The disability of old age is not of long average 
duration. It is normally provided for by sav- 
ings or by the dutiful repayment of the chil- 
dren's obligations. As has been stated the in- 
equalities and risks of the economic life-cycle 
should be equalized by the state. Until we have 
reached that stage of civilization, insurance is 
necessary and pensions may be desirable. So 
we must meet the immediate problem. 

"Whether the Carnegie Company can be of use 
is entirely dependent on its being made either a 
mutual company owned by the policy holders or 
a stock company owned by representatives of 
the academic teachers of the country. If the 
present owners are unwilling to agree to this, 
they demonstrate their lack of good faith and 

property went to the children when needed for the sup- 
port of their own children. Now when parents die at 
the average age of over seventy their property goes to 
their children when least needed. Inheritances should 
go to grandchildren. 



56 CAENEGIE 

proclaim, that they are there not to benefit teach- 
ers, but to control them. 

The only objection to the standard companies 
is their excessive charges. It may be possible 
to arrange with one of them to offer insurance 
and annuities to a large group of teachers on 
some mutual plan that will enable them to pay 
only for what they get. Or it may be possible 
to organize a new company that will accomplish 
this result. If university and college professors 
should establish an insurance company they 
would not transact its details; they would only 
elect trustees or directors. There is no reason 
why they should not do so as efficiently as the 
Carnegie Corporation. The difference would be 
that the trustees would be elected by the teach- 
ers to conduct the work in their interests instead 
of being appointed by Dr. Pritchett and Dr. 
Butler to do as they are bid. It is also true that 
the earned surplus would be used for the benefit 
of teachers instead of being a menace to them. 

There is no warrant for the common opinion 
that teachers and professors are poor men of 
business or inefficient in the conduct of affairs. 
It requires executive skill to conduct a laboratory 
or department; the professor of the novel and 
the stage survives only there. The reputation 
of professors for business incompetence is due to 
absorption in their work, to the inadequate sal- 
aries they accept in order to do the work they 
want to do, and to their futility in faculty meet- 



PENSIONS 57 

ings. The latter situation is caused in large 
measure by lack of power to accomplish any- 
thing worth while and is besides a symptom of 
all large groups meeting for discussion at long 
intervals. University presidents are supposed to 
be efficient and are selected for all sorts of out- 
side jobs from the presidency of the nation 
down to pulling wires for Mr. Barnes of Al- 
bany. These presidents were once professors 
and have usually been elected for traits, such as 
success in after-dinner speaking, not related to 
business efficiency; they represent in this re- 
spect about the average level of the professor. 
When presidents who undertake to control hun- 
dreds of millions of dollars of university prop- 
perty, thousands of professors and tens of thou- 
sands of students meet once a year as trustees 
of the Carnegie Foundation, they prove more 
hopelessly inefficient than any college faculty. 

It is, however, true that teachers are a difficult 
group. They impose their discipline and their 
opinions on immature students and are intel- 
lectually individualistic, they are paid and con- 
trolled by superior officials and are socially sub- 
missive ; they are consequently hard to lead and 
easy to drive. But the situation is not hopeless. 
The intellectual initiative of teachers may lead 
them to see the need of reforms, while their sub- 
jection to administrative machinery has become 
so intolerable that they may be driven to enact 
their Magna Charta. Real progress has been 



58 CAENEGIE 

made in the organization of the American As- 
sociation of University Professors, but we can 
only hope for a slow development of the "con- 
sciousness of kind." When the present writer 
first proposed the establishment of such an as- 
sociation his plans were more directly in the 
form of a union. It might now be desirable for 
the more radical academic teachers to form a 
national union affiliated with the American Fed- 
eration of Labor. 

Agitation and the capitalization of discontent 
may be unladylike ; but they may also be the 
price of liberty. President Butler in his last 
report to the trustees of Columbia University 
tells them what he thinks of those whom he calls 
"academic Bolsheviki"; but their ferment has 
more promise than the dry rot of the rule of 
Czar Nicholas. Liberty, though the name may 
be "soiled by all ignoble use/' is the religion 
of the teacher. He must maintain at any sac- 
rifice his freedom of investigation and of 
thought, his freedom of teaching and of speech. 
If he submits to the violation of his intellectual 
integrity, the colors of his academic hood are 
no more honorable than the colors on the syph- 
ilitic face. University professors can not allow 
themselves to be placed in the economically de- 
pendent classes, for then they are in danger of 
being forced into the intellectually dependent 
classes. And that would be the end of us. 



THE VERDICT OF COLLEGE AND UNIVER- 
SITY PROFESSORS* 

In general, I trust the Carnegie Foundation, 
and I am not able to say in what respect the in- 
surance plan could be better. It seems to me we 
should be prepared to 'Cooperate, unless a fairer 
.and safer plan is offered us. 

I have a reasonable degree of confidence that 
Jf I live a few years more I shall receive the ex- 
pected pension from the Carnegie Foundation; 
but I have never based my own conduct on this 
expectation. I have never thought that I had a 
claim against the foundation. And in general, 
I believe life is happier if, without pusillanimity, 
claims are not unduly exaggerated and unduly 
pressed, >as seems to me to be the case with those 
professors whose voices are just now most loudly 
( heard. Let the professor, like the shoemaker, 
Stick to his business. 

s Personally I am satisfied with the scheme 
,worked out by the Carnegie Foundation. What 
J believe to be an open-minded and efficient effort 
,at service has been far too much the subject of 
attack by individuals who can easily 'avoid hav- 
ing anything to do with its benefactions. On the 
other hand, I fully agree with you that other 

( i Extracts from all letters received subsequent to those 
printed dn the article on ' ' The i Policies ' of the Carnegie 
Company. y 9 

59 



60 CARNEGIE 

insurance schemes should be seriously studied by 
college men. You have again keenly analyzed an 
important situation and as usual made a funda- 
mental contribution to the solution of the prob- 
lem created by it. 

I consider the Carnegie pension in the light 
of back pay for the older teachers. The insur- 
ance and annuity company may be a good invest- 
ment for the younger teachers. 

I am not an expert in actuarial science and can 
therefore offer no useful comments. 

I am not prepared to express an opinion at the 
present time relative to the various life insurance 
and pension plans proposed. 

It would give me much pleasure to assist you 
in the investigation, so I am particularly sorry 
to be insufficiently informed to express an opin- 
ion on the problem of academic insurance and 
annuities. 

My personal opinion is that some special form 
of insurance and annuities for university men is 
desirable and the general idea of the Carnegie 
Foundation that the institutions should pay part 
of the cost of the insurance is a good one. How- 
iever, the plan as proposed seems to me to be lack- 
ing in so many important details that it is 
scarcely possible to give an opinion either for or 
against at the present time. 

I am assured by friends conversant with actu- 



PENSIONS 61 

arial practise that if the Carnegie Foundation 
enters into contractual relations with its benefi- 
ciaries and the various institutions assume some 
share (50 per cent.) of the premium burden it 
would be a good thing, as it embodies the idea of 
group insurance which would help many not 
otherwise insurable. Personally I left the Car- 
negie Foundation plans out of consideration in 
attempting to provide for my period of inactivity. 

My own opinion regarding this plan is that it 
is probably as favorable a one as we can expect 
from the foundation. In their original plans 
they evidently undertook to do what was impos- 
sible, and the present proposals are perhaps the 
best way out of the difficulty. In one respect, 
however, I believe that the plans of the founda- 
tion should be modified, namely, the members of 
the teaching profession should have a majority 
in the board of control of the proposed insurance 
company. 

1 The pension scheme evolved by the Carnegie 
Foundation seems alluring on the face of it, but 
if any compulsory pension Scheme is instituted 
it should be controlled by those whose money is 
concerned. 

I do not think the present plan should be ac- 
cepted without some consideration and perhaps 
revision, from the point of view of the professors. 
Since the foundation was in their interest and 
they are mature men, the adoption or rejection 
5 



62 CARNEGIE 

of it should not be denied to them, and should be 
accepted or modified by them at their pleasure. 
I do not approve of any compulsory form of in- 
surance. 

Together with all others who are interested in 
this matter, I have regretted greatly the repeated 
change of plan that the trustees have found neces- 
sity for making. . . . Together with many others, 
I have been looking to comparative freedom 
from financial responsibilities when my teaching 
term is concluded, and I believe that it would be 
unfortunate materially to change the funda- 
mental idea of the foundation in such a way as 
to take away from teachers the possibility of 
compensation when their periods of service have 
been completed. 

The foundation had a fine original aim and 
the donor deserves our respect and gratitude, 
but the present administration has made so 
many changes, not merely in its rules but in its 
statements of underlying principles, that it can 
neither receive nor expect the continued confi- 
dence of members of our profession. I find it 
difficult to understand, therefore, how any mem- 
ber of the profession can regard it as otherwise 
than desirable to consider alternative plans 
under the control (partial if not complete) of 
the teachers concerned. 

It seems to me that the Carnegie Foundation 
had pretty nearly the right idea in the begin- 



PENSIONS 63 

ning and that it made a great contribution to 
educational progress by introducing it. It is not 
clear to me that they were wise or ethical in their 
jugglings with the original plan. ... It is essen- 
tially unfair that the large number of men who 
intend to do and who will do good work in their 
leisure time should be compelled to contribute to 
the endowment of this quasi-research professor- 
ate. The working man loafs or enjoys himself 
outside his eight hours, without productive effort. 
A producer ought not to pay for the privilege, 
but be paid for his product. 

The life insurance plans of the foundation are 
not satisfactory, but neither are any of the alter- 
native plans. An insurance corporation is a very 
different sort of an organization from the founda- 
tion. No matter how bad a reputation the man- 
agers of the foundation may have acquired, it is 
clear that the insurance corporation will have to 
carry out written contracts. ... I think that we 
should make a very stiff fight to force the founda- 
tion to prepare satisfactory plans. 

Considering that the Carnegie Foundation has 
of itself stated that it will be or is unable to meet 
the pensions expected; and also admitting that 
there is a considerable financial reserve already 
at hand in this foundation, it would seem to be 
desirable to make a definite effort to establish 
tentative coordination between a "representa- 
tive body of teachers" and the Carnegie Foun- 



64 CABNEGIE 

dation rather than try to set up an independent 
insurance company under the sole control of the 
teachers themselves. How such a representative 
body may he organized and made authoritative 
I do not know. From the nature of the case it 
is not probable that any compulsory plans will 
ever be agreeable to most of the profession. 

In discussing a Professors Insurance Company 
it seems to be tacitly assumed that such a com- 
pany would have marked advantages over exist- 
ing insurance companies. In the case of the 
Presbyterian Ministers' Fund I believe the rates 
are unusually low. Are there other special com- 
panies of this sort which show similar low rates? 
Can not we have a report on this company and 
other similar companies, if they exist, by a com- 
petent actuary, showing why these rates' are low 
and whether professors might expect similar 
rates in a new company formed in the near fu- 
ture? Unless some distinct advantage could be 
almost guaranteed in a special company most of 
us would prefer to deal with the old reliable com- 
panies. 

I believe in cooperative insurance. Only com- 
petent actuaries can judge whether a proposed 
scheme will work. I am glad to see the Carnegie 
millions do any good they can do. But first I 
should like to see the foundation carry out Mr. 
Carnegie's expressed purpose. 

Publicity and fair criticism are having a most 



PENSIONS 65 

wholesome effect, and the teaching profession is 
very greatly indebted to you for your work and 
influence along these lines. 

I am in favor of the plan under teachers' con- 
trol ; that this should be worked out carefully by 
a committee appointed by the Association of 
University Professors. 

I favor the Carnegie Foundation submitting 
a plan that the teachers may voluntarily accept. 

I am enclosing my ballot on the matter of life 
insurance. Many thanks for your illuminating 
article on the subject. 

You may record my vote under the head "It 
seems desirable to consider alternative plans, 
etc." 

, Permit me to add that I have read your ar- 
ticle with much interest and appreciation. 

Consideration of alternative plans is de- 
cidedly advisable. 

I vote heartily [for alternative plans]. 

I am quite clear that it is highly desirable to 
consider alternative plans under the control of 
the teachers concerned. 

I should like to see a life insurance society for 
teachers modeled on that of the Presbyterian 
clergy. 

The Carnegie Foundation plan does not seem 
to be satisfactory. 



66 CAENEGIE 

I can only voice my doubt and dissatisfaction 
in regard to the pension situation. 

Professors do not wish insurance and annui- 
ties, but adequate salaries. 

I agree with those who think we should, if pos- 
sible, act through the American Association of 
University Professors. I dislike the notion of 
compulsory insurance. 

Neither the Carnegie Foundation nor the dis- 
cussions to which it has given rise have added, it 
seems to me, dignity to the teaching profession. 
While personally rejecting it under any guise, I 
marked the second plan in the interests of those 
who hope for its future helpfulness. 

Much interested and amused by outpourings 
of professors recently published. No doubt sin- 
cere, but they do not talk that way even in fac- 
ulty meetings, much less in public. We are as 
much an anonymous profession as editors. 

I should like to see the Carnegie fund applied 
to carrying out its promises as far as it will go. 
I think it has been useful as an object-lesson. 
First : in showing what a terrible need there was 
of relief. Second : it actually has helped a goodly 
number and deserving people. Third: it has 
shown how not to do the thing it set out to do. 

I consider the Carnegie plan very unsatisfac- 
tory. The alternate plan is the lesser of the two 
evils. Compulsory insurance may work to the 



PENSIONS 67 

advantage of some of the younger men in the 
teaching profession. Personally, however, I 
should prefer to get my insurance from the 
existing companies. 

No insurance plan should be approved that 
contains a compulsory provision. Any plan 
worthy of being supported because of aid or pro- 
tection which it may offer to the teaching pro- 
fession should be subject to the control of the 
teachers themselves. 

I doubt whether it is desirable to obtain a more 
"democratic" administration of the Carnegie 
Foundation. The most satisfactory course, apart 
from provision by the individual institutions, is 
that of securing some properly preferential 
treatment from the established insurance com- 
panies. 

I am quite strongly of the opinion that any 
plan for the pensioning of university teachers 
should be entirely divorced from The Carnegie 
Foundation. I trust that the committee of the 
American Association of University Professors 
will continue its study of the problem, and be 
able to present at some annual meeting a plan 
for the self -insurance of the teachers, supple- 
mented possibly by partial payments from the 
universities. This plan preferably should be 
worked out in connection with one or more of the 
old j line companies. 



68 CAENEGIE 

I have only bad a doubtful confidence in their 
various plans from the beginning, which has di- 
minished as I have gathered information from 
casual sources. From the first I have continued 
my insurance and other financial arrangements 
in complete disregard of the Carnegie Founda- 
tion. From what I know, therefore, I certainly 
would not vote that their plan is satisfactory. 
On the other hand, my opinion, I must say, is 
one of prejudice. Therefore, having so much 
faith and confidence in your integrity, I would 
rather leave it that if you think my vote can 
fairly be placed as favoring alternative plans, 
you may place it there. 

My own opinion is that it would be much better 
if money available for such purposes were given 
to various institutions for the express purpose 
of increasing the salaries of the professors, leav- 
ing it to them to make personal arrangements 
for their old age. College salaries at present are 
not a living wage. 

I am opposed to retirement at sixty-five and to 
any compulsory plan of insurance. I favor de- 
cidedly higher salaries, so that the university 
professor may provide for himself and his family 
instead of depending on others to do so when his 
days of service are over. 

I object to compulsory insurance. I consider 
that neither the Carnegie Foundation nor the 
regents of a university have the right to decide 



PENSIONS 69 

how an instructor shall 1 be insured. It seems to 
me that any plan of dictatorial insurance inter- 
feres with the personal rights of an individual. 
Existing 1 insurance companies are sufficient. 
Therefore I consider the Carnegie proposals as 
meddling interference. 

The ordinary professor would feel very much 
better about the matter in question could he be 
assured that the pension system would be man- 
aged by the men most interested — i. e., by the 
professors themselves — and could he also have 
in some way his confidence in the Carnegie 
Foundation restored. 

It may be that the foundation can not extricate 
itself from its present difficulty without working 
injustice ; but, if so, a frank admission of the in- 
justice might help to restore confidence in its in- 
tentions. 

I am entirely out of sympathy with the present 
management of the Carnegie fund. 

I most emphatically desire salary enough to 
do my own providing for the future for myself 
and family. No scheme of salary held back is 
trustworthy. 

It seems to be desirable to consider alternative 
plans under the control of the teachers con- 
cerned. I have confidence in their ability, hon- 
esty and earnestness. 

From the first the Carnegie Foundation has 



70 CABNEG1E 

been a disappointment, and I am no longer in- 
terested in its plans or work. 

We have our own pension fund having been 
excluded from the Carnegie by reason of " sec- 
tarianism. " It is the kind of sectarianism I now 
appreciate. 

It used to be a cause for complaint in that we 
were not on the foundation but as things have 
turned out, there is no one now who regrets that 
we are still "off." Surely it is desirable that 
plans such as you suggest should be considered. 
The Carnegie proposition I would have none of. 

If I wanted insurance I certainly should not 
go to the Carnegie board for it. There is in my 
mind no doubt that the original purpose of the 
foundation was good. Unfortunately the trus- 
tees selected have not proved themselves to be 
the proper persons. 

Since receiving the Handbook of Insurance 
and Annuities for Teachers I have made up my 
mind to keep such insurance as I have in the 
standard companies and get more of the same 
kind when I ean. 

Like any successful business man, the teacher 
should be in a position to provide for himself 
and to choose the kind of insurance he regards as 
best suited to his situation. I resent charity and 
never have banked on any assistance other than 
might come through my own efforts. 



PENSIONS 71 

I believe that the people concerned should 
have a part in managing and controlling any 
system of pensions. This viewpoint seems to me 
to coincide with the increased demand at the 
present time for a greater amount of world 
democracy. I do not feel that educational insti- 
tutions should be an exception to this world 
movement for a greater human liberty. 

The past management of the pension fund has 
caused me to lose all confidence and interest in 
it, and while I do not know that I am opposed to 
any movement among the teachers themselves to 
form an insurance company, I had expected to 
look to commercial insurance for anything in 
that line. 

I would have no compulsory insurance. If 
any benefit can come from the foundation it 
should be to make the insurance cheaper for col- 
lege teachers. The system, whatever it shall be, 
must be reliable, and it should make the benefi- 
ciary really independent instead of dependent — 
independent not only as regards an old age of 
poverty, but independent to carry on his investi- 
gations as the truth may lead him while he has 
no emeritus before his name. 

I distinctly prefer a plan other than the new 
Carnegie plan, but am not a competent enough 
business woman to be sure which of the proposed 
alternates is the best. I can not overstate, I 
think, the sense of obligation I feel to you for 



72 CAENEGIE 

your unflagging zeal in a matter so intimately 
connected with the efficiency and the dignity of 
our profession. 

I never did take much interest in the founda- 
tion and its plans. I have never anticipated re- 
ceiving any kind of benefit from it. I am not in 
favor of compulsory insurance. It may be pos- 
sible that a satisfactory plan of insurance for 
teachers may be developed, but, as for myself, I 
am inclined to trust to my own plans and to 
the regular old-line insurance companies for pro- 
tection. 

Eegarding life insurance, I believe that every 
man should be free to determine what provision 
he should make for himself and family. The sug- 
gestion with which you close your article on this 
/subject in School and Society, that one of the 
great mutual companies might make a separate 
department for teachers, I believe to be a good 
one. I have never had any great faith in the 
plans of the Carnegie Foundation and conse- 
quently do not expect to be disappointed. 

, The problem of providing for one's old age is 
one that has to be faced in all occupations, and I 
see no reason why the teaching profession should 
be singled out for paternalistic treatment in this 
particular. If money is to be spent in providing 
pensions for teachers, I should prefer to have it 
used to make sufficient increase in salaries to 
permit the purchase of annuities through the reg- 



PENSIONS 73 

ular insurance companies, and then leave it to 
each individual to decide whether or not to use 
the increase in this way. 

I can not believe that it is right to accept a 
pension in the form of charity bestowed by some 
private corporation, whether they call it a ' ' foun- 
dation" which arises after a man has become so 
rich that he can not give his money away, or 
whether it is doled out straight from his gener- 
ous overflowing soul. ... If our teachers and 
professors 1 and industrial workers who live by 
salary or day wage are worthy of pensions, then 
those pensions should be arranged for in some 
sensible manner as coming direct from all of the 
people — governmental sources. 

Many teachers are improvident and need a 
compulsory pension system, which is an argu- 
ment in favor of the same. Many other teachers 
are independent in their thoughts and actions 
and also far-sighted and provident for the fu- 
ture; to such men a compulsory system is ab- 
horrent. To the latter type of man particularly 
is the idea also abhorrent that he be held from 
full freedom of action by a pension system de- 
pendent in part at least upon the good will of the 
school employing him. In other words, the inde- 
pendence of the teacher must be maintained. 

During the last fifteen years there has oc- 
curred nothing to warrant our taking much 
stock in the stability of the Carnegie Foundation. 



74 CAENEGIE 

Furthermore, I believe that the salaries of pro- 
fessors should be such that by frugality they 
should be able to provide for themselves and their 
dependents adequately when old age comes upon 
them. ... I wish to see something done for the 
professors now. Then under correct conditions 
let them look to their own futures. I am opposed 
to any thing that has a tendency to make a man 
a dependent in his old age. 

After reading the plans past and present I 
have no great interest in them. I carry life in- 
surance, yet I do not anticipate that I shall will- 
ingly take insurance under the new plan. By re- 
maining single I hope barring disability to be 
able to take care of my own future without being 
under a yoke. I regret that I must seem un- 
grateful for Mr. Carnegie's gift, given no doubt 
in the finest spirit, but the manner of its admin- 
istration has made it a menace. 

To Mr. Carnegie himself, in my mind, is due 
great credit for a grand idea and a sincere effort 
to establish that idea as a recognized principle. 
The unfortunate outcome is due simply to the 
bad administration. Instead of making the orig- 
inal fund a nucleus to which other agencies 
would gladly add to build up a secure position 
for teachers, the administration sought, with the 
power that the inadequate capital gave them, to 
acquire a personal control of the educational 
policies of the country. Wise as some of the dic- 
tated policies doubtless were the effect was bad. 



PENSIONS 75 

Instead of serving as an impetus for further de- 
velopment of the principal of safeguarding the 
professor, other efforts were effectively blocked. 
An insurance against premature accident or old 
age is most desirable if it comes from a society at 
large and as a right due the dignity of the pro- 
fession, but no one wants to depend on a pension 
dictated by a presumptuous administrator of a 
private charity. 

I shall not hesitate to advise any of my col- 
leagues that their own financial interests, to say 
nothing of their academic relations, will be best 
served by taking insurance in one of the regular 
companies making their choice of policy after 
careful consideration of all of the essential fac- 
tors involved in each of their individual cases. 
Inasmuch as the foundation seems very lately to 
have discovered that the best form of "benefi- 
cence" should be placed on a "contractual" 
basis, there is but one conclusion which every 
member of the profession can entertain, namely, 
to seek insurance where contracts are guaranteed 
by law, and where the basis of cost and profit is 
adequate to stabilize the monetary return — un- 
less teachers might find a way thereby the highly 
selected character of their insurance risk can be 
discounted by corresponding reduction in rates 
or an increase in preliminary returns. 

I have ceased to take any great interest in the 
plans of the Carnegie Foundation. I thought its 



76 CAENEGIE 

plan of insurance was inadequate and promised 
little advantage as compared with the plans of 
other insurance companies. ... I am tempted to 
think that the American University Professors 7 
Association could accomplish more if it turned 
its attention toward getting legislation establish- 
ing an allowance and pension system in case of 
disability and retirement for age. This is akin 
to my thought that the same association could 
accomplish more in behalf of academic freedom 
and salaries by becoming a trade union and co- 
operating with labor organizations. Had we not 
better trouble ourselves more about the question 
of a fair distribution of wealth and income? If 
justice were meted out to all we would have less 
need of pensions. 

When I was called to and the letter men- 
tioned that it was on the Carnegie list, I at once 
figured what that was probably worth in terms 
of salary addition. On the principle of not cry- 
ing over spilt milk or looking a gift horse in the 
mouth, I should not care to discuss whether the 
money might not have been more wisely applied 
in enabling college after college to start its own 
pension system, taking off the burden of accrued 
liabilities, or otherwise. But when it is proposed 
to organize an institution which is to accept fu- 
ture payments, the prospects for the future must 
inevitably be judged by the records of the past. 



PENSIONS 77 

It would be morally objectionable to compel 
any teacher in service now to insure, though 
there would not be the same objection to a raise 
in salary to be devoted to that specific purpose. 
Nor do I think there is any prospect of so inde- 
fensible a course as compelling a teacher to in- 
sure in a particular company, particularly one 
whose rates were higher than larger, stronger and 
older companies. 

The more I think about the whole situation of 
pensions of any kind for teachers, the more I dis- 
like the idea from the point of view of the main- 
tenance of individual self-respect. I think there 
is another answer to the whole question, although 
of course we must not be too academic in discus- 
sing it. In other words, we must not forget that 
it is a condition we are facing. The necessity for 
a retirement fund for teachers or some form of 
compulsory insurance is in the last analysis based 
upon the fact that teachers are underpaid. "Why 
should this continue ? Would it not be desirable 
to make a fight for adequate payment of teachers, 
and by adequate payment I mean salaries which 
would be sufficiently large to permit of proper 
living conditions and at the same time to leave 
enough surplus, so that the individual could him- 
self or herself provide for old age through the 
usual channels, i. e., regular insurance companies. 
It seems to me that such 'conditions would be 
much more compatible with self respect than the 

6 



78 CARNEGIE 

present conditions, which it is apparently as- 
sumed are to continue indefinitely. 

Unless the foundation can provide insurance 
at considerably less cost than the established in- 
surance companies, I should think most men 
would prefer the standard insurance companies. 
Personally, if I were a young man just starting 
out I should hesitate a long time before I would 
engage in college or university work, so far as 
pensions or compensation are concerned. I 
should prefer public school work. I was in pub- 
lic school work for a good many years. It is 
much less unattractive than college professors 
usually imagine, and the financial and personal 
situation of college professors is less attractive 
than it seems to persons from the outside. There 
are many reasons for this which it would take a 
long letter to state, and which you probably 
know better than any one else, as you have made 
a very extensive study of the various aspects of 
university administration. I may add, however, 
that it is a significant thing that nowadays col- 
lege professors in a number of instances which 
have come to my notice, are privately advising 
their students to go into high-school work rather 
than 'college work. 

I have for many years been dissuading young 
men who consulted me from aiming to enter our 
profession. The new pension plan, combining 
stout leading-strings with an unpleasantly pat- 



PENSIONS 79 

ronizing attitude, would increase my reluctance 
to enter on an academic life if I were beginning 
over again. 

Some years ago I abandoned attention to the 
whole Carnegie Foundation scheme, partly be- 
cause I took much stock in the argument that it 
pauperizes the profession and subjects the men 
to arbitrary government. Perhaps in this last 
matter I am wrong. The adequate payment of 
teachers is one of the most important things in 
modern life ; if the profession can not be recom- 
pensed, second and third class people will be in- 
trusted with the education of our boys and girls 
and with the tasks of research — if indeed we are 
to have either education or research. 

I think that those who originally balked at the 
Carnegie arrangement were long-headed in their 
suspicions. I did not see as clearly as they the 
effect that such a promise of protection would 
have upon our universities to which belongs in- 
alienably the duty to guard faithful servitors 
against the accidents of life and its old age disa- 
bilities. Personally I have never had the slight- 
est possible comfort from the Carnegie promise. 
... I query whether we teachers could run our 
own insurance company — perhaps we could — but 
I do wish that the American Association of Col- 
lege Professors or some similar representatives 
of the profession might have some immediate 
control of the funds so generously given by Mr. 
Carnegie. 



80 CAXNEG1E 

, The Carnegie Foundation has lost the confi- 
dence of college teachers because of its failure at 
the start to foresee the financial difficulties which 
would result from its original plan, and for the 
disingenuous attitude of its authorities when at 
became necessary to modify and finally to aban- 
don that plan. As a result, such teachers look 
with disfavor upon compulsory insurance in a 
company in the management of which the present 
authorities of the foundation have any voice. 
Nor is a mutual company directed by college 
teachers with limited insurance experience and 
scanty capital likely to command more confidence. 

The situation seems to me to be one which can 
only be cleared up by a series of law suits ; either 
the Carnegie people are right or they are wrong 
in thinking that they can make and break prom- 
ises at will ; either university professors are right 
or are wrong in thinking that they have a legal 
interest in the Carnegie Foundation for academic 
insurance. These questions are of great impor- 
tance to the academic profession. If the pro- 
fessors on the Carnegie Foundation have actually 
a legal interest in the funds of the foundation 
they are entitled to a say in the management of 
the funds. This can only be determined by the 
courts. I would therefore suggest that some re- 
sponsible body, like the American Professors, 
shall take up in detail the various published pro- 
grams or promises of the Carnegie Foundation ; 



PENSIONS 81 

thait they shall carefully go over the ground and 
find out what universities made definite changes 
and concessions in order to take advantage of the 
foundation's offer; that they shall select a suit- 
able individual from the teaching staff of one 
such university in whose case the promises have 
not been fulfilled and shall bring suit to enforce 
the fulfilment of the contract. 

I say emphatically that I regard the proposed 
plan as unsatisfactory. I do not see that the 
plan interests members of faculties of state uni- 
versities, as I feel sure that the states would not 
make the payments required of them, and I cer- 
tainly would not favor compulsory payments by 
the professors themselves. For myself I would 
not entrust any money to an institution that has 
been so grossly mismanaged as has the Carnegie 
Foundation. Neither would I favor an institu- 
tion managed by university professors, as I do 
not regard that as their proper business:. I do 
not greatly favor any pension scheme, as I think 
thait university professors should be paid salaries 
that would enable them to take care of them- 
selves. What I think the foundation should do is 
to apply the income from its funds to the pay- 
ment of disability pensions in all the colleges of 
the country, making these payments as far as the 
money will go in the order in which the cases are 
deserving -and critical. This is what it should 
have done in the first place. 



82 CAENEGIE 

After the incapacity and self-sufficiency of the 
Carnegie Foundation has been demonstrated so 
completely, I feel little disposed to favor any 
plan which postulates that they shall have a share 
in the management. Should their 'attitude 
change so that they become willing to cooperate 
instead of assuming to direct I should then have 
less objection to their sharing in the administra- 
tion of any plan that might be adopted ; but now 
that we have the American Association of Uni- 
versity Professors, I should look to them for the 
last word in all matters affecting the interests of 
the teaching profession and not to a self-consti- 
tuted and self-perpetuating body. 

I am one of those whom you refer to as having 
accepted positions on the expectations of the pen- 
sions. In 1916 I resigned a professorship at 

, at $3,000, and accepted one at , 

at the same figure ; and one of the chief reasons 
for doing so was that tit was an ' ' accepted ' ' in- 
stitution. Having been in "accepted" institu- 
tions for nearly two years, I learned that my "ex- 
pectations" were precisely nothing. The ex- 
perience was not calculated to strengthen my 
confidence in the foundation. It now appears 
that I am to be compelled to enter a plan of in- 
surance which has never been submitted to me 
and the terms of which I do not know, and that 
the administration of the funds I pay over is to 
remain in the hands of the same foundation. But 



PENSIONS 83 

it is well known that professors like to have their 
affaiirs managed for them. 

The Carnegie Foundation has been a great 
disappointment in that it can not do what it 
promised to do. The main thing in my opinion 
is to get all colleges and universities to double 
their present scale of salaries, because the present 
scale does not attract the able young men. I do 
not think college professors are much interested 
in annuities — but more interested in making pro- 
vision for their children — as the normal success- 
ful man ought to be. 

My present feeling is one of lack of confidence 
in the scheme as outlined by the foundation ; and 
I strongly object to any form of supervision and 
compulsion which gives the university financial 
authorities control over the expenditure of sal- 
aries. Were I a young teacher and eligible to 
the benefits and obligatioms of the proposed 
scheme, I should greatly prefer insurance in one 
of the established business concerns dealing ex- 
clusively with such matters and under the con- 
trol of financiers without academic relations. 

I feel that the Carnegie Foundation has been 
a failure. What is the record ? First the retiring 
allowance for twenty-five years' service is with- 
drawn even from those within two or three years 
of the time, who certainly had the legal and moral 
right to count on it. Next the age limit is raised 
to seventy years from sixty-five and deduction 



84: CAENEGIE 

made in case of retirement before that age. 
Under present conditions I do not believe many- 
professors will live to reach seventy. For my 
own part, I could not trust for the future to any 
institution as unstable as the Carnegie Foun- 
dation. 

Certainly I agree with you that the previous 
conduct of the foundation has not been such as 
to inspire respect or confidence on the part of 
members of the profession, and personally I 
should prefer to entrust my interests to the cor- 
poration of the university which I serve — even 
though it has thus far shown no great interest in 
the problems under consideration — rather than 
to any body of men willing to be further repre- 
sented by President Pritchett. 

As you have pointed out professors should 
capitalize the reduced risk to which they are en- 
titled. Their superior heredity and habits should 
be taken advantage of as readily as their ideas. 
If present laws will not permit this, the facts 
should be organized and presented to legislators 
and the laws changed. These pension organiza- 
tions should be completely independent of the 
universities, national in scope, and non-compul- 
sory. No plan should be adopted which will 
interfere with the progress of democratizing our 
universities, or interfere with a sane develop- 
ment of a governmental insurance or pension sys- 
tem. 



PENSIONS 85 

I am absolutely opposed to any compulsory 
class insurance. The mere need of compulsion 
implies either serious defects in the scheme itself, 
or the assumption of obstinate stupidity as a 
characteristic of the class concerned. We in our 
profession are unbearably familiar with the latter 
assumption, which has determined the policy of 
appointment, promotion and dismissal so con- 
sistently that a very general system of misselec- 
tion, now firmly established, has produced a type 
closely corresponding to that assumption. Should 
we now take one more step in making this as- 
sumption our own ? I am opposed to any board 
of control endowed with a shadow of a title to an 
eleemosynary function. Any ruling board 
should be stripped of any power of prerogative, 
discretion, authority and direction, derived, 
however remotely, from any eleemosynary hy- 
pothesis. A professional insurance association 
which does not offer greater security, greater pe- 
cuniary advantages, and greater active partici- 
pation and control to its members than an ordi- 
nary commercial insurance company, and tries 
to combine compulsion with autocratic self-suffi- 
ciency, is really too funny for serious considera- 
tion. 

Any scheme of professorial insurance, if com- 
pulsory and not controlled by the policyholders, 
will surely become what the Carnegie Foundation 
has already proved to be — a means of keeping 



86 CABNEGIE 

down salaries and grinding the faces of the poor. 
The solution is simple. Let professors be paid 
decent salaries and let them provide for the fu- 
ture on their own responsibility, or else let them 
be paid full salaries during the term of their 
lives. The great desideratum at present is better 
salaries, so that we and our families may live 
decently and that we may do our work effectively. 
"The Lord helps those who help themselves." 
Let the American Association of University Pro- 
fessors start an aggressive 'campaign for financial 
betterment and back it up by concertedly and 
resolutely opposing an expansion in curricula 
and staff, and by discouraging men from enter- 
ing the profession, until the end is achieved. 
The commercial press and some university presi- 
dents have sneeringly dubbed us "The Pro- 
fessors' Union." Let us accept the challenge im- 
plied and become a real fighting union. 

Of the three plans, I feel especially well dis- 
posed toward the one which advocates dealing 
with the old established insurance companies. 
. . . However, a company formed of college and 
university professors would be preferable to any 
scheme outlined by the present Carnegie man- 
agement. I reflected not a little upon the career 
of this particular board, before, indeed, I read 
anything published by you, and I gradually 
came to feel myself in opposition to it. There 
was nothing very tangible, but I distrusted 



PENSIONS 87 

it. Frankly, I think that the head of the board 
is incompetent, and incompetency is almost crim- 
inal in such a matter. I especially object to any 
form of compulsory insurance for college pro- 
fessors. I do not think that we should be classed 
along with incompetents and the feeble-minded. 
Given a fair salary, men who should be engaged 
in college work will look out for themselves. 

It has long been apparent that the i ' Carnegie 
board of 'College presidents, ' ' as a speaker uncon- 
sciously, but truthfully, dubbed that group, has 
signally failed in the task assigned them. Per- 
haps the teaching profession deserved to see fail- 
ure come upon a plan which treated them at once 
as children unable to care for their own interests 
and as anxious or at least willing to be cared for. 
The new Carnegie board plan, so far as I know 
it, has the same faults as the old ones — paternal- 
ism, essential irresponsibility and the evasion of 
existing obligations. If it could be brought 
about — the securing of a favored rate from an 
old line company based on the fact that teachers 
are a favored risk — it would seem to me the best 
way out. 

A serious fault that is obvious to the teacher is 
that it fails! to give one of the essential require- 
ments of insurance, viz., reasonable assurance 
that the promises will be kept. It is interesting 
to read the explanations of the Carnegie Foun- 
dation for the changes in plans, but unfortu- 



88 CAENEGIE 

nately the beneficiary (?) is vitally concerned, 
and the Carnegie Foundation as an insurance 
company is losing the confidence of teachers. 

As chairman of our faculty committee on re- 
tirement allowances I have carried out an inde- 
pendent investigation of the ' 'benefits' ' offered 
by the contracts available through the Teachers 
Insurance and Annuity Association and my con- 
clusions fully corroborate those arrived at by 
yourself and others. . . . Nothing should be left 
undone at this time to bring college teachers to 
full realization that this new enterprise of the 
foundation is not worthy of their cooperation 
and confidence. 

I am more pleased and thankful every year as 
I view the changing policies of the foundation 
that it has been my lot to work in institutions 
not under the Carnegie pension system. Unques- 
tionably my " misfortune " has been good for- 
tune. I have never for one moment allowed my- 
self to look forward to the help of a single dollar 
of Carnegie pension money, and have therefore 
laid my own plans from the beginning to take 
care of my own finances. And that has been the 
more possible because my salary has been better 
than it would have been in the benevolent insti- 
tutions under the foundation. 

If teaching is to be considered a "man's size" 
job I see no reason why the teacher should not 
receive "man's size" pay and therefore be in a 



PENSIONS 89 

position to make the same insurance plans as any- 
other -citizen. If the teacher is to continue as an 
underpaid employee to such an extent that he 
will have to depend on semi-charitable insurance, 
it seems to me that the funds sfhould be handled 
by a reputable insurance company and by pro- 
fessional instead of amateur managers. 

It has seemed to me that the management of 
the foundation has been attended with grave lack 
of foresight. I can not help but feel that very 
few institutions would have retained the same 
management as long as this institution, when so 
many errors of judgment seem to have been 
committed. I should certainly oppose any plan 
for insurance and annuities which involved com- 
pulsion, and feeling as I do about the institution 
in question, I should be very unwilling to enter 
into any scheme which was to be administered by 
those who have administered its affairs. 

My opinion is that the value of the Oarnegie 
Foundation, after all the changes through which 
it has passed, has become insignificant for college 
teachers. It is l ' poor-relief. ' ' Teachers ought to 
establish their own insurance company, con- 
trolled by the American Association of Univer- 
sity Professors and owned by this body, but rein- 
sured in some 'already existing company. 

I think that college teachers should act for 
themselves in the matter of insurance and pen- 
sions. Neither boards of trustees nor charitable 



90 CAENEGIE 

funds will do the business, nor is there any rea- 
son why teachers should sit by as if they were in- 
mates of an orphan asylum or an old ladies home, 
and wait for some one else to do it. I believe 
that the matter is a proper function for the 
Association of University Professors. 

I have personally spent very little time over 
C-P-B doings because I never expected to do any 
business with the Co. I believe that if a professor 
is to receive so low a salary that he can not lay 
up anything for his old age he should in justice 
receive the balance of his salary in the form of a 
pension later on. But I would prefer to receive 
an adequate salary and lay up my own pension 
and maintain my self-respect and independence. 
If the pension is given the university should 
somehow provide it. 

Let us insist upon being men among men, 
women among women, citizens among citizens, 
seeking adequate compensation for our services, 
and demanding the right enjoyed by other peo- 
ple of spending our own money and making our 
own provisions for the rainy day or for old age. 
Any pension scheme for teachers, it seems to me, 
is built upon an assumption that they are in- 
capable of managing their own affairs and need 
guardians, and any such scheme has a strong 
tendency to keep down wages. But, of all the 
schemes suggested, the one under discussion 
seems to me the least desirable. 



PENSIONS . 91 

The Carnegie Foundation no longer merits our 
consideration. We are through with it unless it 
has a house-cleaning. No self-respecting man 
will tolerate compulsory insurance from the ad- 
ministration. A mutual company of men of pro- 
fessional rank, taken over by some "old line" 
might be desirable. At any rate let us study the 
problem further and fearlessly. 

The ability of teachers to stand squarely on 
their feet, mentally and morally, is none too great 
as things are; a pension system controlled by 
persons or forces outside of the teaching ranks 
will, it seems to me, work against the best inter- 
ests of the teaching profession. Adequate main- 
tenance of the teacher must be secured in some 
other way. 

I feel very strongly upon this matter and sub- 
stantially agree with you. I am thoroughly op- 
posed to the scheme which so many of our uni- 
versities have adopted of a retiring age, and the 
Carnegie pension scheme looks to me like an ef- 
fort to irrevocably fasten this system on the uni- 
versities. 

The Carnegie Foundation is not equal to its 
self-imposed task of judging and standardizing 
universities, and the university that submits 
itself to such control is in great danger of serious 
harm. The individual professor should be wiser 
than to place any reliance on such a scheme for 
his financial support. 



92 CAENEGIE 

As a self-respecting citizen as well as a college 
professor I have always felt a repugnance 
towards an organization which has presumed to 
dictate the educational policies of this country 
and which intimates that college professors as a 
class are not to be trusted to handle their own 
financial affairs. 

I regret and deplore the existence of any in- 
stitution having the objects, apparent or con- 
cealed, and the consequences, whether intended 
or merely inevitable, of the Carnegie Founda- 
tion. The only hope of an honorable future for 
the profession of teaching in our colleges and 
universities lies in the increases of salaries to 
magnitudes comparable with the incomes of suc- 
cessful men in the professions of law and medi- 
cine, and in complete independence in regard to 
provision for old age and death. 

We are all grateful to you for fighting the 
octopus. 

I favor the divorce of the pension and insur- 
ance system from an agency which might prosti- 
tute the independence of the college professor. 

I want to thank you for your splendid efforts. 
We need a higher standard of men in our profes- 
sion, and if we do not find some means of attract- 
ing them it will continue to fall in dignity and 
in the estimation of the people. 

I want to express my appreciation of your in- 



PENSIONS 93 

cisive treatment of the Carnegie Foundation's 
dust-in-the-eyes and hemp-about-the-neck insur- 
ance policies and other policies. Personally I 
will have none of them. 

No compulsion; an organized plan under 
supervision of the insured seems best; we must 
beware of control by the capitalist of the teach- 
ing profession; academic freedom first, financial 
protection second. 

Under Pritchett's leadership the Carnegie 
Foundation has failed. It was organized pre- 
sumably to improve teaching, but has resulted in 
decreasing the influence of the teacher. It's up 
to the foundation to find 'a new manager and also 
the funds to fulfil its promises. 

I have no confidence in the men who have been 
in charge of the foundation. I should have the 
strongest objection to any scheme for compul- 
sory insurance, and I do not believe such a 
scheme would be adopted by our better institu- 
tions or tolerated by the profession. 

It seems to me that the president of the Car- 
negie Foundation has demonstrated his unfitness 
for leadership as regards academic insurance so 
completely that the first question should be the 
finding of a suitable president in case insurance 
is to be considered in connection with the Car- 
negie Foundation. 

College professors should demand a salary 

7 



94 CARNEGIE 

sufficient to provide for insurance in the estab- 
lished companies. I resent being in the charity 
class. I have no confidence whatever in the Car- 
negie Foundation as constituted at present and 
would not entrust a cent of my earnings to its 
management. 

The administration of the Carnegie Founda- 
tion up to date, though the present scheme is not 
escaped out of a madhouse like the first, has been 
so unintelligent and so incompetent that one is 
quite sure of its collegiate character. . . . The 
real marvel is that sometimes those supermen, 
Presidents and Deans, have risen out of the 
ranks of mere professors. Immediately the lay- 
ing on of hands by 'a board of trustees converts 
them into men of affairs, men of the world. 

Of course I most cordially disapprove of the 
foundation's new scheme. I regard a compul- 
sory insurance plan as a device for depriving 
members of the academic profession of a part of 
their salaries, and nothing more. Under such 
management as the Carnegie Foundation has ex- 
hibited in the past, I think that the previous 
sentence states the whole story. 

Pritchett and Butler are so completely dis- 
credited in the eyes of the teaching profession, 
so far as my information goes, that no one can 
now put the slightest faith in any of their propo- 
sitions. We all owe you a great debt of gratitude 
for your vigorous leadership in exposing the true 



PENSIONS 95 

nature of the Carnegie Foundation's manage- 
ment. Success to your arm ! 

From the first it has seemed to me that the Car- 
negie Foundation — at least under President 
Pritchett — was a machine for 'controlling and 
enslaving academic action. I have marked some 
of its results in , as elsewhere, and I de- 
plore the results on the policy of institutions of 
learning. 

I have the greatest admiration for your self- 
sacrificing and untiring efforts in behalf of the 
intimidated and nerveless academic profession 
of this country. 

I am opposed to all schemes further to humble 
and depress the university professor. I would 
be interested in any system that would make 
them more powerful and effective in their work. 
All this nonsense about pensions is calculated to 
preserve the present weaknesses instead of pre- 
venting them. I want none of Pritchett 's benev- 
olence. 

All these private "foundations" and "endow- 
ments' ' are abhorrent to me in any form. 
Whether intentionally or not, their effect is to 
shackle the freedom of speech and action of those 
who should be most free — the teachers of the na- 
tion. Moreover, the present discussion interests 
me little, except as it shows the protest of aca- 
demic slaves. It is too narrow. Old age pen- 



96 CARNEGIE 

sions for teachers interest me only as a part of 
the general subject of old age pensions for every 
man who has done his share of the world's work. 

The more I ponder on the matter of teacher's 
insurance the more I am convinced that in order 
to be a real good it must be absolutely divorced 
from the Carnegie Foundation. Further, it must 
be a mutual affair, managed by the teachers and 
founded on sound insurance principles. As I 
see it, the Carnegie Foundation is only helping 
to establish more firmly the academic tyranny. 
If democracy is to have any chance to justify 
itself, the next great autocracy to be crumbled 
is the one manifest from the top to the bottom of 
our extensive educational system. 

Every one who has followed the various and 
inexcusable changes in the policy of the Carnegie 
Foundation must have lost all confidence in the 
management. The attitude of the president of 
the foundation toward college professors as shown 
in his writings, the last of which appeared in the 
December Atlantic Monthly, reveals his incapac- 
ity to deal fairly with them. He evidently re- 
gards professors as neither intelligent nor hon- 
orable. One who takes this view is incapacitated 
for fair dealing. His attitude is, of course, the 
psychological effect of autocratic power. The 
president of the foundation has already demon- 
strated his intellectual unfitness for the position 
which he holds. 



PENSIONS 97 

Every teacher in America ought to feel in- 
debted to you for the fight you are making for 
educational democracy. ... As for the Carnegie 
Foundation, I think it should save every penny 
toward meeting its legal obligations instead of 
wasting money on printer's ink in attempts to 
"explain." ... In the end salaries and pensions 
are less important than tenure, for secure tenure 
means academic freedom, and academic freedom 
is as essential to political liberty as an independ- 
ent judiciary or a free press (if I may speak of 
things hypothetical as if they existed). And we 
could have secure tenure and academic freedom 
to-day, in spite of oligarchic control, if the pro- 
fession as a body would demand them and back 
up the demand by concerted action. 

I see no advantages and the greatest elements 
of danger to our already supine teaching stock 
in the whole Carnegie program as now outlined, 
and vote, if only an alternative is given, for the 
proposition that some different plan be consid- 
ered. If given free choice I prefer to have noth- 
ing to do with the Carnegie pension fund. . . . 
Needless to add I hope that you will keep up the 
fight and take comfort in the fact that the ma- 
jority, though weak as milk, is with you. 

Is there on this earth another such body of in- 
effectual serfs as the American college professors, 
underpaid, overworked, afraid of their jobs, de- 
spised by the students, general public, press, 



98 CARNEGIE 

everybody, bulldozed by petty tyrants who get 
control through "executive ability" which gen- 
erally means wire-pulling and kowtowing to all 
that ruins academic life ? ... As for the pension 
business it has been a monumental example of 
stupidity, craft and shabby shuffling. My inner 
conviction is that we should no more aim at pen- 
sions than lawyers and doctors; that we should 
aim at just salaries and manly independence, if 
not for our own sakes at least that our sons may 
be taught by real men and not by old women and 
prospective paupers and pensioners. I have had 
thirty-five years happy and successful (in a 
small way) experience and these be my inner- 
most convictions. I have always regarded you as 
holding the only right views and as having the 
courage of your convictions. You are a fighting 
general trying to lead a charge of sheep. 

I doubt much whether connection with the 
Carnegie Foundation is worth what it costs — at 
least under the management of Mr. Pritchett. 
It began by using its resources to make itself a 
dictator of educational policy, and from the first 
it has been more interested in its own importance 
than in the welfare of the college teachers. 
When it became necessary to reveal that the 
foundation had been brought to the verge of 
ruin by astounding incompetence, Mr. Pritchett 
sought to cover the fact by telling us that we were 
a lot of lazy beggars. And he is even now so 



PENSIONS 99 

lacking in modesty that, in this month's Atlantic, 
he writes as an expert on pensions and offers 
another homily on the moral needs of college pro- 
fessors. I should say that any new plan ought 
to be preceded by the retirement of the present 
management ; and that, if we may not insist upon 
this, it proves only once more that the calling of 
college professors in the United States is an ig- 
noble profession. 

Every activity of the Carnegie Foundation, I 
believe, has been misdirected or reprehensible. 
No compulsory scheme of insurance could be en- 
tered into with the Carnegie Foundation by any 
self-respecting educational institution, and no 
self-respecting teacher would countenance such 
a scheme. Any scheme which tends to give the 
Carnegie Foundation, directly or indirectly, con- 
trol of, or influence over, our educational insti- 
tutions, methods and aims is in and per se evil 
and not to be tolerated. Carthago delenda est; 
or, at least, Hannibal must be conquered, and 
Carthage "(made safe for democracy." 



THE CARNEGIE FOUNDATION FOR THE 
ADVANCEMENT OF TEACHING* 

The annual reports of President Eliot to the 
corporation of Harvard University have in cer- 
tain respects been the most interesting educa- 
tional documents of past years; their place will 
now be taken by the reports of President Prit- 
chett of the Carnegie Foundation. In these 
reports and in the intervening bulletins, there 
are not only given lucid and complete accounts 
of the activities of an institution of vast impor- 
tance for higher education, but also careful 
studies of the educational system of the country. 
In this respect the foundation sets an example 
to the General Education Board, which keeps 
for its private use the information that it col- 
lects, and does not even publish the financial 
statements that should be required by law from 
every corporation, and first of all from those ex- 
empted from taxation. 

President Pritchett's third annual report, 
which covers the year ending September 30, 
1908, shows that the new grants made during the 
year amounted to $113,765. The grants in force 
amounted to $303,505, an increase of $101,360 
over the preceding year. Should this increase 
continue for two further years, the income of 
the foundation would be exhausted. The retir- 

i Printed in Science, April 2, 1909. 

100 



PENSIONS 101 

ing allowances in force were: On basis of age, 
86 ; on basis of length of service, 81 ; for disabil- 
ity, 15 ; to widows of professors, 29. The aver- 
age age of those retired for length of service is 
65.7 years, so that it would appear that more than 
half of them are entitled to retirement for age. 
The average value of the retiring allowances is 
$1,532.58. The institutions drawing the largest 
sums are : Yale, $25,195 ; Cornell, $16,570 ; Har- 
vard, $16,305; Tulane, $14,365; Columbia, 
$14,055 ; Stevens, $11,075. 

Valuable data are given in the report in re- 
gard to institutions on the accepted list and the 
state universities, together with a discussion of 
political interference in tax-supported institu- 
tions with special reference to the University of 
Oklahoma. Other topics treated are: the ex- 
change of teachers between Prussia and the 
United States; uniformity in financial reports; 
teachers' insurance; college requirements for 
admission; special students; amount of instruc- 
tion given by teachers; professional education; 
denominational education. 

The foundation adopted during the year two 
new policies of great importance — one the ad- 
mission of tax-supported institutions for the 
cost of which Mr. Carnegie has undertaken to 
give $5,000,000, the other the provision that a 
widow shall receive half the pension to which 
her husband would have been entitled. 

There is no valid reason why the states should 



102 CAENEGIE 

not accept a gift from Mr. Carnegie for their 
universities. In so far as the money came orig- 
inally from the people, and especially from the 
agricultural regions of the central and western 
states, through the workings of the tariff, this 
was imposed by the representatives of the states, 
and the best use of the money is to return it to 
those from whom it was taken. Nor is the fact 
that the fund is in the form of bonds of the 
United States Steel Corporation significant. All 
our universities hold bonds of railway and other 
corporations whose activities have not always 
been beyond reproach. 

The real questions are whether a centralized 
pension fund is for the advantage of our univer- 
sities, and, if so, whether a fund can be provided 
sufficiently large for the purpose. The writer 
dissents from most of his colleagues in doubting 
the desirability of a uniform and centrally ad- 
ministered pension fund. I have always been 
prejudiced against annuities and those who buy 
annuities ; it is distasteful to me to be thrust by 
force of circumstance into this class. The presi- 
dent of one of our leading universities has stated 
in a report to the trustees that the annual value 
of the pension to a professor in middle life is 
$1,200. I should prefer to have this increase to 
my salary now when I have children to educate ; 
or, if it could be saved, to have it as capital to 
be used for such purposes as may be desirable 
and to be bequeathed to my family. The with- 



PENSIONS 103 

holding of part of a professor's salary to be paid 
ultimately after good behavior in the form of 
an annuity will tend to increase the autocracy 
of univeristy administration and to limit not 
only the freedom of action but also the freedom 
of speech of the professor. It will also limit the 
freedom of action of the administration, for a 
professor can not be dropped honorably when 
part of his salary has been reserved for a pen- 
sion. It seems from the decision of the courts 
in the case of Professor Capps against the Uni- 
versity of Chicago that this can not be done 
legally, and there will probably arise complica- 
tions which have not been fully foreseen. 

It is not intended to imply that the office of 
the professor should be subject to the commer- 
cial law of supply and demand. On the con- 
trary, he should have life tenure, only forfeited 
by the violation on his part of the conditions 
implied in accepting the office. It would be in- 
tolerable if a professor could be dismissed sim- 
ply because the president thinks that he might 
obtain a more acceptable man in his place for 
the same or a smaller salary. The professor is 
appointed at the average age of nearly forty 
years and is likely to remain what he then is ; if 
an unwise appointment has been made, the in- 
stitution should accept the responsibility. 

Permanent tenure of office doubtless implies a 
continuation of salary or a pension in case the 
professor can no longer serve to advantage ; and 



104 CABNEGIE 

this leaves the difficulty resulting from paying a 
professor less than he is worth in middle life in 
order that he may receive more than he is worth 
in old age. Obviously we must face this situa- 
tion; but it is emphasized and made worse by 
the establishment of a uniform and centralized 
system of pensions. It can be most conveniently 
met if we are sufficiently optimistic to assume 
that on the average the services of professors 
over sixty-five years of age are worth to their 
institutions and to the community the salaries 
that had previously been paid. A professor at 
this age may become a less efficient teacher in 
professional and required courses, though this is 
not always the case. It is, however, by no means 
certain that he is, on the average, a less desirable 
teacher in advanced and elective courses ; or that 
his scholarship, experience, judgment and poise 
are not of the utmost advantage to the univer- 
sity. A man of this age may not have new ideas ; 
but his research work and productive scholar- 
ship are likely to continue and to be of greater 
value to the world than the salary he is paid. 

The teachers who have had the greatest influ- 
ence on the writer are Professor March, of La- 
fayette College, and Professor Wundt, of Leip- 
zig. Professor March ceased to teach recently 
at the age of over eighty years and Professor 
Wundt continues to lecture regularly at the age 
of seventy-five years. It would have been a 
serious loss if these great men had ceased to 



PENSIONS 105 

teach at the age of sixty or sixty-five. If I were 
now beginning the study of psychology, I should 
wish to spend a year under Professor Wundt 
at Leipzig and a year under Professor James at 
Harvard. I should be able to work under Pro- 
fessor Wundt, but should find that Professor 
James had been retired on a Carnegie pension 
in the fullness of intellectual vigor. If Mr. 
Angell can to advantage serve as president of 
Michigan to the age of eighty and Mr. Eliot can 
serve as president of Harvard to the age of sev- 
enty-five and still retain the chairmanship of 
the trustees of the Carnegie Foundation, we have 
evidence that a dead line can not be drawn at 
sixty-five. 

The institutions accepting the terms of the 
Carnegie Foundation for pensions on the basis 
of age must make retirement on a pension at 
sixty-five mandatory, or else they must make it 
a matter of arrangement between the adminis- 
tration and the professor. Either alternative is 
unfortunate. If the retirement is mandatory, 
the institution will lose men whom it can not af- 
ford to lose, and professors will be retired who 
are competent and anxious to continue their 
work. It will be a poor reward in the academic 
career to cut men off from the service of their 
lives and pay them part salary, when in other 
professions at that age they would probably have 
continued to be leaders and to have had an in- 
come at least twice as large as twenty years be- 



106 CABNEGIE 

fore. If the retirement is only permissory an 
institution might gain temporarily by retiring 
its less efficient men; but this would be only a 
mitigated form of the policy of dismissing pro- 
fessors whenever their places can be filled at less 
cost. Every institution could improve for a time 
its faculties by dismissing twenty per cent, of 
its professors; but such an undertaking would 
in the end be disastrous to the institution and 
to higher education. If only incompetent pro- 
fessors and those not in favor with the admin- 
istration are retired at sixty-five, the pension will 
be far from an honor and by no means a worthy 
close to an academic career. It will frighten 
able men from it at the outset, and tempt them 
to desert it when they can. 

It may give a sense of security to be assured 
of a pension in old age ; but when the time comes 
the reduced salary will cause difficulty to those 
not having independent means. There will be 
a tendency for the professor to engage in some 
form of money-making and to begin early in his 
career. An eminent man of science has written 
to me that since he had been retired on a Car- 
negie pension he could no longer contribute to a 
scientific journal, as he had to earn a living for 
his family by writing fiction. The community 
and the world are largely dependent on the uni- 
versity professor for the advancement of science 
and scholarship and for the maintenance of the 
best ideals, and those great services are not paid 



PENSIONS 107 

for directly. They can only be assured by at- 
tracting the best men to university chairs and 
then setting them free to do their work with no 
interference and no fear of dismissal even on 
half salary. 

In my opinion the Carnegie Foundation would 
have been most wisely administered if it had 
agreed to give to every institution that had 
adopted or would adopt a half-salary pension 
after the age of sixty or sixty-five an endowment 
sufficient to defray the remaining half of the sal- 
ary, so that the professor would be paid his reg- 
ular salary for life. He could then retire from 
the teaching for which he was not fit, but could 
continue to give his services to his institution 
and to his science. Or if the allowance had been 
paid by the foundation directly to the professor 
without regard to whether or not he continued 
his teaching, then he could give to his institution 
so much service as he might render to advantage 
and in turn receive so much salary as he might 
earn. 

But the trustees of the Carnegie Foundation 
are presidents, not professors, and the money is 
to be divided in the main so as to relieve the 
financial straits of the institutions, not to im- 
prove the status of the professors. The pro- 
fessors in those institutions which already had a 
pension system do not gain financially as far as 
the old-age scheme is concerned and lose in cer- 
tain ways; whereas the institution gains the 



108 CAENEGIE 

amount it had contracted to pay in pensions. 
The professor as well as the president is pleased 
that the university has added resources; but 
they do not differ from any other unrestricted 
endowment. 

The conditions are different in the case of in- 
stitutions which did not have a pension system. 
Here too it is chiefly the institution which gains, 
for it was bound in honor to provide for its dis- 
abled professors, and it will hereafter pay 
smaller or less increased salaries in view of the 
pensions. 2 But the presidents and professors 
have an assurance that they did not have and 
will have annuities that they did not earn or 
only partly earned. The advisability of having 
made the pensions retroactive in this way is 
questionable. Gifts may be at the same time ac- 
ceptable and demoralizing. When Tulane Uni- 
versity raises nominally its entrance require- 
ments beyond what can be met by the high 

2 It is not admitted by the officers of the foundation 
that pensions will tend to prevent increase of salaries; 
but this appears to be an inevitable result of economic 
law. In seeking recruits for the army and navy the gov- 
ernment states that the small wages are compensated for 
by the pensions, and one of the state universities has 
urged that if the legislature does not accept the pensions 
from the foundation, it will be necessary to pay higher 
salaries in order to retain its professors. A pension sys- 
tem may or may not improve educational efficiency, and 
it may or may not improve the general conditions of the 
academic career; it will not improve permanently the 
financial status of the professor. 



PENSIONS 109 

schools of Louisiana in order that it may be ac- 
cepted by the foundation, we are not surprised 
to find that it draws annually $14,365, and when 
the Central University of Kentucky cuts itself 
off nominally from its denominational control in 
order that it may be accepted, we are not sur- 
prised to find that three of its eleven professors 
are immediately placed on the foundation. 

It would, I believe, have been far better if the 
foundation had undertaken to hand over to each 
institution that had adopted or would adopt a 
pension system an endowment from the income 
of which the professors ' salaries could have been 
maintained for life. Even if it were decided to 
give a pension smaller than the salary, the en- 
dowment might with equal advantage be made 
once for all. The foundation could in this case 
take up one institution after another and from 
its income award a fund sufficient to endow a 
pension scheme in each. Under these circum- 
stances, the income would never be completely 
tied up, but could always be used in the way 
most likely to promote the advancement of teach- 
ing. The same plan might with great advantage 
be pursued by the Carnegie Institution of Wash- 
ington. If instead of attempting to administer 
from Washington scientific institutions in all 
parts of the country, it would found and partly 
endow such institutions, and then leave them to 
local control and support, the money would go 
much farther and the dangers of a bureaucracy 
would be avoided. 

8 



HO CABNEGIE 

The drawbacks of a centralized pension sys- 
tem may be illustrated by an example. A pro- 
fessor has reached the age limit with a salary of 
$4,000. He prefers to continue his regular 
teaching and research and can do so compe- 
tently. If the institution had to continue his 
salary, it would have no inclination to relieve 
him of his duties, nor would it care to do so if 
it had to pay a pension of $2,400, for in this 
case the $1,600 released would not suffice for the 
salary of a new professor. But if the payment 
of the professor's pension can be put off on the 
Carnegie Foundation, then the president will 
reflect that he can obtain a new man about 
equally competent for $3,000. He will thus save 
$1,000, and the institution will still have credit 
for the work of the retired professor; the stu- 
dents he attracts; the indirect teaching that a 
man engaged in research at the university can 
not fail to do ; his valuable judgment and coun- 
sel. The institution saves $1,000 and gets 
$2,400 more that it could not get in any other 
way. At first sight it may seem that no one 
suffers except the dismissed professor; but in 
the end it will be found that the institution and 
higher education also suffer. 

The risks of the system for the professor are 
increased by the scheme of retirement after 
twenty-five years of service. Sixteen of the most 
efficient professors in Harvard University and 
fifteen in Columbia University are now liable to 



PENSIONS 111 

compulsory retirement apart from age; and 
owing to the great growth of these universities 
within the past twenty years, the number of 
men in this class will increase rapidly. These in- 
stitutions could take from the Carnegie Founda- 
tion about $75,000 a year now by retiring these 
men and probably two or three times as much 
a few years hence. If the emeritus professors 
maintained their interest in the institution and 
continued their research work, the university 
would apparently lose but little in return for 
the great financial gain. But the professors 
would suffer, and ultimately the whole academic 
life would be demoralized. 

The reasons leading to the adoption of retire- 
ment after twenty-five years of service are ob- 
scure to me, unless it is intended to relieve in- 
stitutions of men whom they do not want to 
keep. Some few professors having independent 
means or outside employment may like to retire 
on half salary; but these are exactly those who 
do not need pensions. Any who may be dis- 
abled after twenty-five years of service and be- 
fore reaching the age-limit gain ; they are, how- 
ever, but few and should be otherwise provided 
for. It appears to be a mistake to hold up re- 
tirement from the life-work of a professor as a 
prize or reward. The usual professor can not 
afford to retire unless he engages in money-ma- 
king, and the plan will thus lead to commercial- 
ism and the discouragement of research. He is 



112 CAENEGIE 

permitted by the rules to do anything except 
teach — that for which he should be most com- 
petent and that which he should most enjoy. 
Research work and advanced teaching can be 
carried on far better in conjunction than di- 
vorced. In order to reward a professor after 
long years of service, he should be relieved, not 
of half of his salary and the privilege of teach- 
ing, but of so much routine instruction and ad- 
ministration as interfere with his research. This 
is now done in our better universities ; professors 
of distinction who wish to devote themselves 
mainly to advanced students and research work 
are encouraged to do so. 

There is a minor difficulty in the way of re- 
tirement — whether it is to be a reward or a pun- 
ishment — after twenty-five years of service as 
professor in that it is impossible to date fairly 
the beginning of such service. In every univer- 
sity some professors between the ages of fifty 
and sixty-five will be liable to retirement on the 
basis of age and others not, but there will be no 
significant difference in the work that has been 
accomplished for education and scholarship by 
the two classes. According to the circumstances 
of the case, it will be an advantage or a risk to 
have been given the title of professor at an early 
age in a small institution. It may on the whole 
be regarded as fortunate that the Carnegie 
Foundation has not the means to continue these 
annuities for length of service. They will, I 



PENSIONS 113 

fear, tend to demoralize both the "humble and 
ill-compensated" professor and the " conspicu- 
ous' ' and much-tempted president. 

A very useful service that the Carnegie Foun- 
dation could perform for the professor and for 
academic life would be some form of pension for 
disability, as this can not be purchased. An- 
other useful service would be the pensioning of 
widows and minor children. Personally, I 
should prefer to let the professor purchase vol- 
untarily at cost the disability annuity and the 
life insurance ; but I am instinctively an extreme 
individualist. Certainly the pensioning of the 
widows of professors entitled to pensions by 
statute instead of by favor is a notable advance 
made by the foundation last year. The enforced 
pensioning of widows is even more socialistic 
than the enforced purchase of annuities ; for ul- 
timately the unmarried professors will be com- 
pelled to pay part of the premiums on behalf of 
their more fortunate colleagues. But it may be 
that people who bring up children deserve more 
from the world; certainly those who have only 
the annual income which they earn for those de- 
pendent on them should insure their lives, and 
perhaps they should be compelled to do so. The 
weakness of the system of the Carnegie Founda- 
tion is that it applies only where it is least 
needed. It is the instructor or junior professor 
with young children, having had no chance to 



114 CABNEGIE 

save, who finds it hard to pay an insurance 
premium and sometimes neglects it. 

It is not clear to the writer how it was esti- 
mated that a fund of five million dollars would 
provide pensions for the state universities and 
colleges. The demands on the foundation will 
depend on whether retirement is mandatory or 
whether it ordinarily follows only on disable- 
ment. At Harvard University there are at pres- 
ent seven professors on the retired list, two 
widows receive pensions, and the cost to the 
foundation is $16,305. There are twenty-eight 
other professors now eligible to receive allow- 
ances. Should they be compelled to retire or 
wish to do so, the total charge of Harvard Uni- 
versity on the foundation would be about 
$75,000. 

Even with a stationary number of professors 
and stationary salaries, there are two circum- 
stances which will add greatly to the cost of the 
system. One of these is the "age distribution 
of the population, ' ' a factor which the trustees 
of the foundation may not have considered, as 
it appears to have been completely overlooked 
by both advocates and opponents of the old-age 
pensions in Great Britain. The population of 
that country, through a high birth rate from 
1850 to 1900, has increased greatly since the 
middle of the last century, and the people form 
a youthful population. There are probably two 
to three times as many people over seventy years 
of age per thousand of the population in France, 



PENSIONS 115 

with its stationary population, as in Great Brit- 
ain. The British chancellor of the exchequer 
will be awakened to the apparently unexpected 
circumstance that the number of those entitled 
to pensions from the government will be doubled 
or tripled apart from any increase in population. 
Similar conditions obtain in our universities 
which have more than doubled the number of 
their professors in the course of the past twenty 
or thirty years. Nearly all those appointed to 
professorships were young and are now growing 
old together. In twenty-five years the relative 
number of professors over sixty-five will prob- 
ably be doubled or tripled. 3 

3 In the faculty of pure science of Columbia Univer- 
sity there are fifty-two professors, the ages of forty- 
seven of whom are given in ■ ' American Men of Science. ' 9 
The distribution is: 

Age Number 

30-35 4 

35^0 8 

40-45 12 

45-50 9 

50-55 9 

55-60 1 

60-65 3 

65-70 

70-75 1 

The median expectation of life of these men is at least 
twenty-five years, and we may expect that more than one 
half of the thirty-four now between forty and sixty-five 
will still be living twenty-five years hence. In the place 
of one man over sixty -five years of age and eligible to 
be pensioned for age (there is now none retired on a 
pension), there will be seventeen. 



116 CABNEGIE 

The other circumstance that will increase the 
demands on the funds of the foundation is the 
pensioning of widows. Professors are nearly or 
quite as likely as not to leave widows, and the 
expectation of life of their widows will be nearly 
or quite as great as their own when eligible for 
annuities. Thus the cost of the widows' pen- 
sions will ultimately be nearly or quite one 
fourth the cost of the annuities. It is further 
to be noted that all widows will receive pensions, 
even though a considerable proportion of those 
entitled to annuities do not draw them. 

It consequently appears that with the same 
number of professors and the same salaries as 
at present, Harvard University would after a 
few years be able to take from the foundation at 
least $150,000 a year in annuities and at least 
$35,000 in widows' pensions. How much would 
actually be taken for annuities would, of course, 
depend on whether or not retirement were man- 
datory or generally adopted. 

The number of professors will not remain sta- 
tionary, nor will salaries remain stationary. 
Harvard has about doubled in size in the past 
twenty years and quadrupled in size in the past 
forty years. Even should this rate of growth 
not continue at Harvard, it will, I believe, be 
maintained on the average and will be exceeded 
in the state universities. Harvard and Columbia 
may in forty years have four times as many pro- 
fessors as they now have; Michigan, Illinois, 



PENSIONS 117 

Wisconsin and the other state universities will 
almost surely have four times as many. It is a 
modest hope that salaries will increase fifty per 
cent. The cost in a great university of a pension 
system such as that of the Carnegie Foundation, 
if all retire who are eligible, may forty years 
hence be expected to be in the neighborhood of 
one million dollars a year. If at that time trust 
funds bring 3 per cent, interest, it will require 
$30,000,000 to endow a pension system for a 
single university; and there will probably be 
not fewer than twenty such with a hundred 
others tending to become such. 

Forty years hence some two billion dollars 
may be required to endow completely a central- 
ized pension scheme for North America such as 
that of the Carnegie Foundation. Nor is this too 
long to look ahead. Young men of twenty-five, 
now entering the academic career and accepting 
smaller salaries in view of a pension at sixty- 
five, will not be honorably treated should it be 
withdrawn. Indeed they can possibly recover 
the pension at law. 

The figures given here may seem somewhat 
appalling; but they are really not so. If pen- 
sions are only paid for disability at any period 
in the lives of university teachers and to their 
widows and minor orphans — I believe that no 
other kinds of pensions are desirable — the cost 
would be much less. It would represent a cap- 
ital far beyond the possibility of private endow- 



118 CABNEGIE 

ment, but would be a sum not considerable in 
comparison with the wealth of the country. 
Twenty times the amount could to advantage be 
saved each year by a reasonable reduction in the 
expenditure on 'alcoholic drinks. The economic 
gain to the nation and to the world from the re- 
search work of university professors far exceeds 
their salaries and their pensions, even though no 
account be taken of the value of their teaching 
or of their contribution to ideal ends. The more 
scientific men the world supports, the richer will 
it become, as well as the better. But the nation, 
the states and the cities must maintain their 
universities. 



THE LENGTH OF SERVICE PENSIONS OF 
THE CARNEGIE FOUNDATION* 

Either as cause and effect or as a matter of 
mere time sequence, the writer has anticipated 
in this journal the most important actions taken 
by the trustees of the Carnegie Foundation at 
their two last annual meetings. There was 
printed in Science for April 24, 1908, corre- 
spondence with the president of the foundation 
urging that the pensions of widows of professors 
entitled to retiring allowances should be made a 
matter of right rather than a matter of optional 
favor, and at the meeting of the trustees in No- 
vember this was done. It seems that this subject 
is not treated clearly by the president in his 
last annual report. Referring to the first adop- 
tion of the rules of the foundation he says : 

The underlying principles which seemed to be clear 
were these . . . (5) The retiring allowance system 
should embrace in its provisions the widows of teachers 
who under the rules had become eligible to retiring al- 
lowances. ... A third rule provided for the pension for 
the widow of any teacher who, either on the ground of 
age or service, was entitled to a retiring allowance. 
These rules have now been in operation for four years. 

In the first annual report, however, it was ex- 
plicitly pointed out that ' ' In all cases, the grant- 
ing of pensions to widows of professors stands 

i Printed in Science, March 11, 1910. 

119 



120 CAENEGIE 

upon a different basis than that of the awarding 
of retiring allowances to professors/' and in the 
third annual report it is noted that "heretofore 
the pensions to widows have been only per- 
missory. ' ' 

I venture to note my service to my colleagues 
in this direction, as some of them think that I 
have performed a disservice in pointing out what 
seemed to me the dangers of the length of serv- 
ice pensions. In Science for April 2, 1909^ I 
wrote : 

The reasons leading to the adoption of retirement after 
twenty-five years of service are obscure to me unless it 
is intended to relieve institutions of men whom they do 
not want to keep. ... In order to reward a professor 
after long years of service, he should be relieved not of 
half of his salary and the privilege of teaching, but of 
so much routine instruction and administration as inter- 
fere with his research. ... It may on the whole be re- 
garded as fortunate that the Carnegie Foundation has 
not the means to continue these annuities for length of 
service. They will, I fear, tend to demoralize both the 
"humble and ill-compensated ' ' professor and the "con- 
spicuous" and much-tempted president. 

My anticipations were soon justified by the 
troubles at the George Washington University, 
which retired on the foundation two of its pro- 
fessors against their will in order to save their 
salaries and because they did not agree with the 
policies of the administration, and which then 
was dropped from the list of institutions ac- 
cepted by the foundation. I was, however, not 



PENSIONS 121 

less surprised than my colleagues to learn that 
the trustees of the Carnegie Foundation on No- 
vember 17 had not only abolished the retiring 
allowance for length of service, but had made 
their action apply to those to whom the pensions 
had been promised. 

This action would be absolutely incomprehen- 
sible if it were based on the grounds alleged by 
the president in his annual report, which has 
just now been printed. He does not even re- 
motely refer to the financial inability of the 
foundation to carry out the obligations it had 
assumed, but bases his recommendation on the 
fact that he has unexpectedly discovered that 
presidents and professors take advantage of the 
rule, and that its effect is not "good" owing to 
"the opportunity which is thus opened to bring 
pressure to bear on the teacher, or by the tend- 
ency of the teacher assured of a retiring allow- 
ance to become ultra-critical toward the admin- 
istration." This last clause throws a curious 
light on the administrative attitude — it would 
be dangerous to let the professor criticize the 
administration if thereby he risked losing only 
half of his salary and not all of it. 

President Pritchett says: "The expectation 
that this rule would be taken advantage of al- 
most wholly on the ground of disabilities has 
proved to be ill founded." But what warrant 
had the trustees for this expectation? The act 
of incorporation states that the object of the 



122 CABNEGIE 

foundation is to provide retiring pensions for 
teachers who "by reason of long and meritorious 
service, or by reason of old age, disability or 
other sufficient reason shall be entitled to the 
assistance and aid of this corporation." The 
rule adopted in regard to the first of the two 
classes of pensions specified in the act of incor- 
poration reads: "Any person who has had a 
service of twenty-five years as a professor and 
who is at the time a professor in an accepted in- 
stitution, shall be entitled to a retiring allow- 
ance computed as follows." 

The change in the attitude of the president of 
the foundation has been as sudden as it is com- 
plete. In a letter to him, written on March 21, 
1908, I said that the wisdom of the length of 
service pension was doubtful, and in his reply, 
intended for publication in Science and printed 
in the issue of April 24, 1908, he wrote : 

The provision for permitting a retiring allowance to be 
gained upon length of service seems also to us to add 
much to the value of the retiring allowance system. 
Under this provision a professor may, at the end of 
twenty-five years, retire on a stated proportion of his 
salary, the proportion increasing with each year of serv- 
ice. It is not likely that many professors will avail them- 
selves of this provision. The man whose heart is in his 
teaching will not wish to give it up until a much later 
period. There are, however, teachers to w T hom this pro- 
vision will be specially attractive, and that is to those 
who desire to spend the remainder of their active lives 
in scholarly research or literary work rather than in 
teaching. I can imagine no better thing for an institu- 



PENSIONS 123 

tion of learning than to have about it a group of men 
who are engaged in active research and who are not 
burdened with the load of teaching which falls to most 
American teachers. In this way the retiring allowance 
will contribute directly to research. 

Dr. David Starr Jordan, one of the trustees, 
is much franker than the president. He writes 
to the Evening Post that it seemed "financially 
impossible" for the foundation to meet the de- 
mands made on it under the rule. This is cer- 
tainly a valid ground for not admitting to its 
privileges additional institutions or those not 
yet professors ; but according to law resort must 
be had to the bankruptcy court when financial 
obligations can not be met. Whether the foun- 
dation is liable to those who have been financially 
injured by the change in the rule is an open 
question. Probably the only precedent is the 
case of Professor Capps against the University 
of Chicago, in which it was decided that a uni- 
versity can not alter its statutes to the financial 
disadvantage of a professor. It seems that it 
might be urged that the foundation has made an 
implicit contract with the professor. To encour- 
age the advancement of teaching it promises cer- 
tain rewards to those who perform certain serv- 
ices. Those who have performed the services 
can perhaps recover at law the payment prom- 
ised. But whatever the legal obligation may be, 
the moral responsibility is obvious. President 
Pritchett writes that the "change will command 



124 CAENEGIE 

• 
the approval of the great body of devoted and 

able teachers.'' When he learns of his extra- 
ordinary error, he will, it may be hoped, recom- 
mend such modification of the new rule as will 
be accepted as equitable by those concerned. 

The president of the foundation writes: "It 
is part of the invariable policy of the Carnegie 
Foundation to place in the hands of those inter- 
ested in education the fullest details respecting 
the foundation and its administration. ' ' But it 
is not clear that the foundation has been entirely 
frank in the present instance. The official state- 
ment in regard to the rules signed by the secre- 
tary of the board of trustees reads : 

The rules as thus amended provide a retiring allow- 
ance for a teacher on two distinct grounds: (1) to a 
teacher of specified service on reaching the age of sixty- 
five; (2) to a teacher after twenty- five years of service 
in case of physical disability. 

Although these are the general rules governing retire- 
ment, the trustees are nevertheless willing to grant a re- 
tiring allowance after the years of service set forth in 
Kule 1 [Rule 2?] to the rare professor whose proved abil- 
ity for research promises a fruitful contribution to the 
advancement of knowledge if he were able to devote his 
entire time to study or research; and the trustees may 
also grant a retiring allowance after the years of service 
set forth in Rule 1 [sic] to the executive head of an insti- 
tution who has displayed distinguished ability as a 
teacher and educational administrator. 

Dr. Jordan has printed the actual resolution 
adopted by the trustees, as follows 1 : 



PENSIONS 125 

It was also on motion, duly made and seconded, re- 
solved that first, the executive committee be instructed 
to safeguard the interests of the following classes of 
cases: (a) those who have research work in view and 
have shown themselves unmistakably fit to pursue it; (b) 
those whose twenty-five years of service includes service 
as a college president; and (c) those in whose mind a 
definite expectation has been created by official action 
that they will be accorded the benefits of the founda- 
tion within the year 1910; and that, secondly, the execu- 
tive committee be authorized to formulate regulations 
in accordance with these instructions. 

It is difficult to reconcile the statement under 
(a) with the announcement of the secretary. In 
the case of (6) one can only reconcile the two 
versions by assuming that the presidents who 
make up the board believe that there can be no 
college president who has not "displayed dis- 
tinguished ability as a teacher and educational 
administrator. ' ' It is not easy to guess a cred- 
itable reason for not having made (c) public, 
for it would not be honorable to conceal it in 
order to save the money due to those who might 
apply under the resolution if it were known to 
them. 

It is certainly odd that a board of trustees 
consisting of university and college presidents 
should increase the maximum pension from 
$3,000 to $4,000, which can practically only be 
of advantage to the comparatively highly sal- 
aried president, and should retain the privilege 
of retiring after twenty-five years, when this is 
denied to the professors through the financial 

9 



126 CAENEGIE 

inability of the foundation. But perhaps they 
assume that higher education can be best ad- 
vanced by retiring the president whenever pos- 
sible. 

The lack of foresight and expert knowledge 
displayed by the president and trustees of the 
foundation is truly astounding. Mr. Carnegie 
wrote in his original letter to the trustees : 

I have, therefore, transferred to you and your succes- 
sors, as trustees, $10,000,000, 5 per cent, first mortgage 
bonds of the United States Steel Corporation, the revenue 
from which is to provide retiring pensions for the teach- 
ers of universities, colleges and technical schools in our 
country, Canada and Newfoundland under such condi- 
tions as you may adopt from time to time. Expert cal- 
culation shows that the revenue will be ample for the 
purpose. 

In making his additional gift for tax-supported 
institutions, he wrote to the president : 

I understand from you that if all the state universi- 
ties should apply and be admitted, five million more of 
^ve per cent, bonds would be required. 

As a matter of fact, a million dollars will not 
support an adequate pension fund in a single 
large university — Yale already draws $35,000 a 
year — and if the state universities continue to 
develop, as at present, and retirement at sixty- 
five is made obligatory, five million dollars will 
not permanently suffice for a single university. 

The increase in the appropriations of the 
foundation for pensions this year is $162,815, 



PENSIONS 127 

and the total appropriation for pensions is $466,- 
320. The total income of the foundation last 
year was $544,355, and the administrative ex- 
penses were $53,584.85. After Mr. Carnegie 
gives the additional five million dollars, the in- 
come will soon be exhausted, even though one of 
the two objects of the foundation, as stated in 
the act of incorporation, may be abandoned. 



THE FIFTH ANNUAL REPORT OF THE 

PRESIDENT OF THE CARNEGIE 

FOUNDATION! 

President Pritchett's annual report gives 
a full and clear statement of the business of the 
Carnegie Foundation for the Advancement of 
Teaching during the year ending November 30, 
1910, and includes an essay on the relations of 
colleges and secondary schools. 

The University of California, Indiana and 
Purdue Universities, and Wesleyan University 
have been added to the accepted list of the foun- 
dation. The two state universities — for Indiana 
and Purdue form together essentially one state 
university — obviously meet standards which al- 
low the admission of colleges such as Beloit, Car- 
leton, Coe, Dickinson, Drake, Drury and Knox. 
The tax-supported universities previously ad- 
mitted are Michigan, Wisconsin, Minnesota, 
Missouri and Toronto. It seems to the present 
writer most unfortunate that the executive com- 
mittee of the foundation should prescribe to the 
state universities what they must do in order to 
receive pensions. Illinois has been told that it 
must break the agreement which it made with 
the professors of the medical school in Chicago ; 
Ohio that it must reconstruct its educational 
policy, and the like. It is to be hoped that those 

i Printed in Science, March 3, 1911. 

128 



PENSIONS 129 

in control of the state universities will resent 
such dictation. Indeed one can not altogether 
dismiss the suspicion that the officers of the 
foundation have the same hope, in order to be 
released from obligations which they could not 
meet. 

Wesleyan University has amended the char- 
ter which made it ultra-denominational — for it 
required not only the president and a majority 
of the trustees, but also a majority of the pro- 
fessors to be members of the methodist episcopal 
church — and although one fourth of the trus- 
tees are elected by the conferences of the church, 
it has complied with the rules of the foundation. 
Other institutions which are altering or trying 
to alter their church affiliations should know that 
the foundation will be very cautious in assuming 
further financial responsibility. 

This appears to be at last clearly acknowl- 
edged by the president and the executive com- 
mittee. The president makes the acknowledg- 
ment retroactive when he writes : 

In every report issued by the Carnegie Foundation, the 
effort has been made to call the attention of colleges and 
universities to the fact that the endowment in the 
hands of its trustees would provide at most an adequate 
retiring allowance system for only a small minority of 
the institutions in the United States and Canada bear- 
ing the name college or university. This was most 
strongly urged even in the First Annual Report. 

But in his first annual report, President 



130 CAENEGIE 

Pritchett estimated that with the original en- 
dowment the foundation could accept from one 
hundred to one hundred and twenty institu- 
tions, 2 including payment of pensions for length 
of service. He wrote : 

It may therefore be safely assumed that while the in- 
come of the Foundation is sufficient to carry out the orig- 
inal plan of the Founder it is not sufficient to extend 
the system of pensions, at least at first, beyond the scope 
which he indicated in his letter of gift. It would seem 
therefore clearly the true policy of the Trustees at the 
inauguration of the Foundation to work within these 
limits, giving a generous interpretation to the terms 
" sectarian ' } and "state" control. 

In his letter of gift, Mr. Carnegie wrote: 
"Expert calculation shows that the revenue will 
be ample" "to provide retiring pensions for the 
teachers of Universities, Colleges and Technical 
Schools in our country, Canada and New Found- 
land/' 

The state of the finances of the foundation is 
shown in the report of the treasurer, from which 
it appears that the receipts for the year were 
$543,881 and the expenditures $538,148, leaving 
a surplus income less than $6,000. The obliga- 
tions undertaken for the current year leave a 
deficit of nearly $100,000. This will doubtless 
be met from the income of the further five mil- 
lion dollars which Mr. Carnegie has consented 

2 More than existed, having the educational standards 
required by the foundation, and being non-denomina- 
tional and non-tax-supported. 



PENSIONS 131 

to give for tax-supported institutions. He wrote 
to the president of the foundation on March 31, 
1908: "I understand from you that if all the 
State Universities should apply and be admitted 
Five Millions more of five per cent, bonds would 
be required." But there are eighty-three insti- 
tutions supported by states and provinces, of 
which but eight have as yet been admitted to the 
accepted list of the foundation. 

If such of these institutions are accepted as 
fulfil the educational requirements originally set 
by the foundation, the income next year would 
not meet the expenses, and thereafter the deficit 
will increase at a rate not not less than $100,000 
a year. It will be necessary for Mr. Carnegie to 
give at least two million dollars each year in 
order that the income may meet the increased 
charges. 

Under the circumstances it is not surprising 
that the executive committee has voted that 

it is not expedient in the future to grant retiring allow- 
ances outside of the accepted list, except in cases of 
especial significance in institutions whose standards are 
so advanced that within a short time the institution will 
be ready to apply for admission to the Foundation. 

How incompletely even such a great gift as Mr. 
Carnegie's establishes a pension system for 
higher education throughout the country is illus- 
trated by the fact that Knox College is the only 
institution accepted in the state of Illinois and 
Tulane the only institution south of Maryland 
and Missouri. 



132 CAENEGIE 

The financial inability of the foundation ob- 
viously accounts for the discontinuance of the 
length of service pensions. What needs explana- 
tion is why they were established, why they were 
discontinued in the manner adopted and why 
they were not paid to those to whom they had 
been promised. Suppose that Mr. Carnegie in 
order to get better domestic servants and at 
lower wages had promised that those who wished 
could retire after twenty-five years of service 
with half wages. If he found that the arrange- 
ment did not work well or that he did not have 
enough money to keep up his establishment, he 
might very well have employed no new servants 
on these terms. But would he have broken his 
engagement with those who had served part of 
the time; and, if so, what would have been the 
decision of the courts if suit had been brought ? 

In his report Dr. Pritchett dismisses the break- 
ing of the pledges of the foundation lightly with 
the single remark : 

The experience of the year has confirmed in the judg- 
ment of the trustees the wisdom and essential justice of 
the action taken a year ago. 

Now this is a truly remarkable, indeed an al- 
most incredible state of affairs. The present 
writer has discuscsed the matter with some two 
hundred university professors in the course of 
the past year, and so far as he remembers not a 
single one of them regarded the action of the 



PENSIONS 133 

trustees as other than unwise and unjust. In 
the act of incorporation the objects of the foun- 
dation are stated to be to provide pensions of 
two kinds: (1) for long and meritorious service 
and (2) for old age, disability or other sufficient 
reason, and further "to do and perform all 
things necessary to encourage, uphold and dig- 
nify the profession of the teacher and the cause 
of higher education." In the method used to 
give up the pensions for length of service the 
foundation has certainly not fulfilled the obli- 
gations specified in the second part of its charter. 

It is obvious that unless Mr. Carnegie greatly 
increases the endowment of the foundation it 
can not meet its present obligations. They ob- 
tain most of all in the case of the younger men 
now entering the academic career in view of its 
promises. It will doubtless be necessary to give 
up the retiring allowances, for age and confine 
them to disability. The present writer does 
not regret this, for reasons which he has fully 
stated (Science, April 2, 1909). 

Retirement at the age of sixty-five has sub- 
stantially the same drawbacks as retirement 
after twenty-five years of service. Men who are 
less competent or who are not in favor with the 
administration will be retired; and instead of 
security and loyalty, there will be unrest and 
bitterness. The president will be quick to retire 
professors because their pensions are not paid 
by his institution, but from an outside source. 



134 CARNEGIE 

There is no more reason for retiring professors 
at sixty-five than justices of the supreme court. 
There should be pensions (or still better full sal- 
aries after long terms of service) for disability, 
but these should be paid by the university. It 
would have been far better if the Carnegie 
Foundation had given its income as an endow- 
ment to one institution after another for the es- 
tablishment of a pension system. Its present 
financial difficulties would have been avoided, 
and the dangers of a centralized autocracy 
would have been escaped. 

It is to be hoped that when the trustees of the 
foundation abandon the retiring allowances at 
the age of sixty-five years, they will do so in a 
manner that will ' ' encourage, . uphold and dig- 
nify the profession of the teacher and the cause 
of higher education." 



TEN YEARS OF THE CARNEGIE 
FOUNDATION* 

By Joseph Jastrow 

The first and largest ground for the establishment of 
systems of retiring pensions for teachers has been found 
in a wish to strengthen the teaching profession. — First 
Report of the Carnegie Foundation. 

A review of so important an institution as 
the "Carnegie Foundation for the Advance- 
ment of Teaching" implies the acceptance of a 
serious responsibility. Under ordinary circum- 
stances the reviewer would confine himself to a 
critical survey of the plans and accomplishments 
of the foundation and an appraisal of their edu- 
cational and social significance. Unfortunately 
the career of the foundation in the ten years of 
its existence presents a questionable departure 
from the policy and purposes in which it had its 
origin ; this fact disturbs the perspective of dis- 
cussion. The serviceable plan will be to consider 
the scope of the foundation; its contribution to 
educational progress; and to reserve the central 
place for the examination of the management of 
the retiring allowances which were established 
"to strengthen the teaching profession/' "to at- 
tract into it increasing numbers of strong men, ' ' 
and "to advance its social dignity and stability." 

i Printed in School and Society, October 7, 1916. 

135 



136 CARNEGIE 

The favorable comment — indeed, the enthu- 
siastic approval — with which the announcement 
of Mr. Carnegie's notable philanthropy was re- 
ceived, is as valid now as ten years ago to show 
the public and professional appreciation. The 
first obligation and privilege of the reviewer is 
to express to Mr. Carnegie the gratitude of the 
teaching profession for his recognition of a need 
and the means whereby it may be met. The 
wisdom of the benefaction appears in the recog- 
nition that the direct method of stimulating the 
intellectual life of the nation is by provisions 
for the men who are charged with the intel- 
lectual interests; that this can be done by im- 
proving the personal and social status of the 
teaching profession in the stronger institutions 
of learning ; that a central influence for this end 
is desirable and may perform a unique service. 
The foundation began its career with important 
assets: the good will of the public, the appre- 
ciation of the teaching profession, the approval 
of its principles and the measures which it in- 
augurated to relieve defects in the higher edu- 
cation. 

University life in this country lacks any com- 
prehensive centralizing influences. Education 
has drifted along, indeed muddled through in 
approved Anglo-Saxon fashion. Yet the chaotic 
result is by no means a source of undisturbed 
satisfaction. A superfluous number of small 
and weak colleges, ambitious in project and lame 



PENSIONS 137 

in performance, a confusing injection of denomi- 
national control and purpose, loose relations to 
preparatory schools, uncertain standards of 
scholarship, poverty and the stress of pioneer- 
ing, political and local influences equally unin- 
telligent, a low appreciation of the teaching pro- 
fession — these conditions reflect the rapid ex- 
pansion of a new country and a heterogeneous 
culture. Here as elsewhere, democracy has paid 
the price of liberty and free initiative. Consid- 
ering the handicaps of condition, the actual 
achievement of the last forty years and the in- 
creasing enlightenment of the last twenty years 
present in retrospect a progress comprehensive 
and remarkable. The leadership has fallen to 
a group of men in the several centers of educa- 
tional influence, inspired by a responsible initia- 
tive and by traditions that could readily absorb 
and express the ideals of scholarship and expert 
service demanded by an expanding democracy. 

In such weighty matters no one can speak with 
greater authority than attaches to the critical 
insight of the group with which he finds sym- 
pathy of temperament, ideals and experience. 
Thus speaking, one may express the conviction 
that there is a distinctive place for a central- 
izing influence such as the Carnegie Foundation 
for the Advancement of Teaching; that indeed 
a private institution, disinterested and with the 
prestige of conferring a comprehensive benefit, 
stands in a peculiarly favorable position. This 



138 CABNEGIE 

conclusion strongly endorses the decision of the 
foundation to conduct a series of investigations 
of educational problems ; it approves the attempt 
to point out the weak points in educational pro- 
visions and to labor for their improvement; it 
extends this approval to the measure of defini- 
tion and standardization needed for a reasonable 
working conception of an institution that may 
be a proper candidate for the benefits it has to 
offer. The step is not without its dangers. Ex- 
treme or mechanical standardization is unde- 
sirable ; small colleges, like small nations, should 
be encouraged to seek salvation in their own 
temper; differences when spontaneous are more 
valuable than resemblances. The offer of benefit 
coupled with conditions, if unwisely exercised, 
may impose where it should be content to en- 
courage. But the fact remains that the task of 
introducing some orderly conception into edu- 
cational ideals and practises is of large impor- 
tance. Some would look to the national govern- 
ment for such a function. It is doubtful whether 
the traditions as well as conditions of political 
office in this country are favorable to such a 
project, even if there were a secretary of educa- 
tion in the cabinet and an organized department 
at his command. The commissioner of educa- 
tion exercises an uncertain jurisdiction, which 
spreads over too large a circuit for intensive in- 
fluence; cooperation rather than initiative may 
reasonably be expected of that office. The de- 



PENSIONS 139 

cision of the foundation to make itself a bureau 
of inquiry to gather and interpret information 
conducive to the progress of educational meth- 
ods and standards, led (in 1913) to the estab- 
lishment of a "Division of Educational En- 
quiry'' with an independent endowment. 

The bulletins of the foundation give evidence 
of the value of the function thus assumed. The 
most notable is the comprehensive study by Mr. 
Abraham Flexner of medical education in this 
country and in Europe. This able, critical and 
frank review exposed the weaknesses of the 
laissez faire policy (especially under the temp- 
tation of a pecuniary profit), and gave an ar- 
ticulate expression to medical standards. The 
comparison with foreign institutions clarified 
the conception of professional training and the 
dependence of progress upon scientific ideals. 
Similar surveys of professional education in law 
and engineering are in progress, with definite 
reports already issued on certain aspects of the 
problems involved. A bulletin upon the mooted 
question of efficiency, though not extreme in its 
position, lends weight to an irrelevant estimate 
of academic values. So appalling has been the 
sporadic invasion of the efficiency engineer into 
the precincts of "the academic plant" that even 
the semblance of warrant (and the report goes 
far beyond that) adds to the menace which the 
word carries to those to whom the university is 
hearth and home. That the foundation has en- 



140 CAENEGIE 

tered the field of educational surveys with an 
appreciation of the serious obligation in time and 
money and expert aid that it implies, is shown 
by the report upon the educational provisions of 
the state of Vermont. This document should 
make impossible the travesty of hasty and irre- 
sponsible judgment which the term "survey" 
has too commonly and too charitably covered. 
Apart from the one instance in which the dig- 
nity, security and peace of mind of an important 
university were ruthlessly and aimlessly sac- 
rificed to the morbid appetite of the modern in- 
quisitor, there are indications that the "survey" 
idea is likely to spread with disastrous conse- 
quences. The foundation may be looked to to 
set the standard for discerning inquiry, and 
eliminate the pretenders from this too inviting 
field. With a similar ideal of service the foun- 
dation has reported upon a few cases of invasion 
of academic liberty or unjust exercise of polit- 
ical authority. This function it may now wisely 
turn over to the Association of American Pro- 
fessors; for it is desirable that professional in- 
terests shall be protected by the profession con- 
cerned. 

The publications in bulletins and the reports 
of the president, Mr. H. S. Pritchett, consider 
a range of problems, in which naturally an ex- 
amination of existing pension systems in educa- 
tional and industrial corporations, private and 
governmental, domestic and foreign, contributory 



PENSIONS 141 

and non-contributory, occupy the largest space. 
Other questions considered are: the financial 
status of the professor, the state and national 
relations to education, the business side of uni- 
versities, the exchange of teachers, educational 
legislation, tuition charges, types of governing 
boards. In respect to these the foundation has 
gathered new and significant data and has 
drawn practical conclusions, indicating the 
points of weakness and the direction of practical 
and desirable progress. Such by-products of 
American education as sham universities, college 
advertising and college catalogues are touched 
upon, and reveal conditions amusing when not 
too discreditable. At times the reports give the 
impression that their pages are used as a medium 
of personal opinion; it would be better to dis- 
tinguish between individual and official state- 
ments and to avoid the appearance of an im- 
perially benevolent wisdom. 

Equally prominent is the account of the ac- 
tivities of the foundation and of the inquiries 
incidental to them. These are for the most part 
germane and helpful, though too commonly dif- 
fuse and in the form of controversy, defense and 
the refutation of obviously irrelevant criticism. 
They serve to show how many and various are 
the problems which the foundation has had to 
face, once it decided upon the proper policy of 
selection of the institutions and the qualifica- 
tions for acceptance. Sectarian institutions 
10 



142 CABNEGIE 

were to be excluded ; but it required considerable 
investigation to determine the measure of re- 
striction in view of the many kinds and degrees 
of denominational control. To determine what 
is and what is not a college required examina- 
tion of entrance requirements, college courses, 
financial support. The foundation was forced to 
assume the responsibility for its conclusions, 
however unanticipated their bearing. The ex- 
amination has been painstaking, and important 
service has been rendered in disclosing the issues 
and the divergences of theory and practise. The 
point of danger in the exercise of this function 
is that of bringing undue pressure upon an in- 
stitution to shape its course toward the benefits 
of the foundation. This comes back to the fun- 
damental question of the wisdom of the policies 
of the foundation and the quality of the dis- 
crimination which it exercises. Every institu- 
tion is free to choose between its own established 
traditions and the qualification for benefit; jus- 
tice is no more and no less difficult a compro- 
mise in this than in many other practical deci- 
sions. The influence of the foundation remains ; 
it sets the example which each institution may 
follow in its own manner. 

We thus reach the policies of the foundation 
and the benefits of the retiring allowances which 
its funds provide. In such complex social pro- 
visions, practise must follow the clue of prin- 
ciple. The leading principle adopted by the 



PENSIONS 143 

foundation is reprinted as the text of this re- 
view. It is just as sound now as it was ten years 
ago; if it has been forgotten or ignored by the 
foundation, that is an additional reason for its 
restatement. To provide relief in old age is one 
matter; to strengthen and dignify the profes- 
sion of teaching is quite another. The provisions 
that accomplish the latter may include the 
former; the reverse relation does not hold. As 
in all important decisions, the critical issue is 
what shall be first and what second. Honor 
places one rule of conduct first, and expediency 
another, as the world knows to its sorrow. If 
the principles and the promises of the founda- 
tion are to be treated after ten years as l i a scrap 
of paper," there is at least the consolation that 
no specious diplomatic reason may be urged for 
maintaining a demoralizing neutrality of opin- 
ion. The obligation of protest is imperative. 

The original position is clearly stated. In 
recognition of the poor reward of the teaching 
profession, the retiring allowance is established 
to compensate the deficiency. It was explicitly 
stated that a retiring allowance as a charity 
would be unacceptable and "has little to com- 
mend it." 

It is essential, in the opinion of the trustees, that the 
fund shaU be so administered as to appeal to the pro- 
fessors in American and Canadian colleges from the 
standpoint of a right, not from that of charity, to the 
end that the teacher shall receive his retiring allowance 
on exactly the same basis as that upon which he receives 



144 CAENEGIE 

his active salary, as a part of his academic compensation 
(Pritchett: 1906). To these teachers and their families 
the pension coming unexpectedly in old age after a life 
in which no adequate provision had been made for fail- 
ing activity has come as a very gracious and noble char- 
ity, and has been accepted in an admirable spirit 
(Pritchett: 1916). 

This metamorphosis — one of several, equally 
adroit — of a rightful "part of [his] academic 
compensation" into "a very gracious and noble 
charity' ' will explain the difficulty of a reviewer 
in appraising the policies of the foundation. 
With principles so ephemeral and policies main- 
tained by an agility beyond a humble academic 
capacity, the reviewer may pertinently interject 
a plea for indulgence as a charity if not as a 
right. 

The rules of retirement applied to two classes : 
to those retiring at the age of sixty-five ; to those 
retiring after twenty-five years of service. The 
allowance for the latter was reduced to approxi- 
mate the draft upon the funds. Disability was 
separately considered and provided for. Of the 
two provisions the second more distinctly served 
to strengthen the teaching profession; it indi- 
cated that the foundation sought to influence 
the career of the professor while in command of 
his best powers. The clearest statement by Mr. 
Pritchett of the value of this provision is in a 
published letter of 1908 : 

I can imagine no better thing for an institution of 
learning than to have about it a group of men who are 



PENSIONS 145 

engaged in active research and who are not burdened 
with the load of teaching which falls to most American 
teachers. 

This provision l ' adds much to the value of the 
retiring allowance system"; there are teachers 
"to whom this provision will be specially at- 
tractive/ ? President Jordan as a trustee of the 
foundation adds: "the retirement of men in 
good health to pursue their studies unhampered 
may be regarded as one of the most important 
functions of the Carnegie Foundation." So de- 
cided was the original emphasis upon reward 
and encouragement and not relief, that the one 
relief standing closest to the solicitude of the 
professors — that of provision for widows — was 
explained as of a different type and made dis- 
cretionary. 

In all cases, the granting of pensions to widows of 
professors stands upon a different basis than that of the 
retiring allowances to professors. 

This provision was clearly an error of judg- 
ment; and in 1910 a correction was made, and 
the widow's allowance was rightly placed upon 
the same mandatory basis as that of the pro- 
fessor. An allowance for a widow contingent 
upon the favor of a board of trustees is hardly 
a consoling provision; but the lack of judgment 
in framing it may be excused, if it was due to 
the adherence to the principle of direct benefit 
to the active professor. The retiring allowance 
was conceived as a right; to make this plain the 



146 CAENEGIE 

initiative in the matter of service-retirement 
rested with the professor. If the foundation 
had continued this policy and used the funds in 
accord with it, and had assumed no obligations 
which it could not meet, its history and the pres- 
ent task would have presented a far simpler and 
pleasanter aspect. The manner of its abandon- 
ment introduces the critical step 2 in the history 

2 In considering this step it should be stated clearly 
and emphatically that the wisdom of the provision for 
service-retirement in the form adopted is not under dis- 
cussion. The present reviewer is convinced that the pur- 
pose aimed at in this provision is the most important 
service which the foundation can undertake. He is not 
convinced that the provision was as well framed as was 
possible, but was content to accept it for the purpose 
which it emphasized. The best criticism of the entire 
plans of the foundation is given by Professor Cattell 
(Science, April 2, 1909), who, however, questions the 
value of annuities and their dispensation by a central 
institution. His contention that the work of the founda- 
tion should have been confined to helping selected insti- 
tutions to found a pension system — each for itself in 
general conformity to a minimum requirement — is 
worthy of the most serious consideration, especially in 
the light of recent proposals. An equally radical objec- 
tion to the policies of the foundation (which can not be 
discussed on the present occasion apart from the general 
reference made above) questions the desirability of in- 
fluencing educational policies by disinterested examina- 
tion and criticism and combining with it the interested 
offer of financial support; it suggests the palm of re- 
ward, in one hand, and the club of coercion in the other. 
The consideration is of vital importance; the danger is 
real and its avoidance requires that wise discretion with- 
out which rule imposes when it should but direct. 



PENSIONS 147 

of the foundation — the indefensible invasion of 
protected territory. 

The service pensions were abolished in 1909- 
1910 without warning or opportunity for discus- 
sion. The manner of their withdrawal and the 
reasons assigned made a bad matter indefinitely 
worse. A quotation from an editorial article in 
the New York Evening Post (February 28, 1910) 
sets the situation in its proper light. 

Dr. Pritchett says that "the expectation that this 
rule would be taken advantage of almost wholly on the 
ground of disabilities has proved to be ill-founded"; 
but if this is meant as a defense against the charge of 
want of good faith, it betrays a misty notion of the na- 
ture of moral obligations. If disability was meant to 
be the basis from the beginning, nothing would have 
been easier than to say so; if it was not, then it was 
absolutely honorable, right and proper for any man to 
avail himself of the retiring allowance offered him with- 
out reference to question of disability. ... If to retire 
under a pension is to mean to retire under a censorship, 
tihe Carnegie Foundation may conduce to the material 
comfort, but will certainly not conduce to the dignity or 
self-respect of the profession of university teaching. 
And, to come back to the main point, the homely obli- 
gation of fulfilling in a reasonable measure substantial 
expectations that have been raised by one 's own declared 
intentions is a duty antecedent even to the high purposes 
to which the Carnegie Foundation is dedicated. 

The aspersions cast by Mr. Pritchett upon the 
men who accepted the original statement in 
good faith is a sufficient indication of the spirit 
of his direction of the affairs of the foundation. 



148 CABNEGIE 

The attempt to introduce after the act an inter- 
pretation that is not remotely suggested in the 
original statement, comes so near to unmitigated 
duplicity that there is no purpose in avoiding 
the term ; the injury and the insult are alike in- 
defensible. But the actual offense is even worse. 
A year later Mr. Pritchett has nothing to say of 
the repudiation other than this : 

The experience of the year has confirmed in the judg- 
ment of the trustees the wisdom and essential justice of 
the action taken a year ago. 

Upon which Professor Cattell (Science, March 
3, 1911) comments: 

Now this is a truly remarkable, indeed an almost in- 
credible state of affairs. The present writer has dis- 
cussed the matter with some two hundred university pro- 
fessors in the course of the past year, and so far as he 
remembers not a single one of them regarded the action 
of the trustees as other than unwise and unjust. 

Such disregard of actual opinion explains the 
distrust with which all further statements em- 
anating from this source have been received. 

The record of the foundation up to the mo- 
ment of this fateful action was worthy of the 
respect and appreciation which it received on 
all sides. Opinions differed as to the wisdom 
of the management; criticisms seemingly over- 
critical have since been proven pertinent, even 
prophetic. But the manner of repudiating spe- 
cific obligations left a sense of irritation to be 
added to the fear then expressed, that a foun- 



PENSIONS 149 

dation with no more conscience than to abolish 
one of the two provisions which constituted the 
practical expression of its purpose, would with 
equal disregard of moral or legal rights abandon 
the other. In 1915-16 a proposal was issued 
looking to the complete reversal of (nearly) all 
its policies. 

There is one exception to the rule that actions 
speak louder than words. The manner of de- 
fense of questionable actions often reveals a 
deeper insight into motives and character. ( This, 
too, the world has learned to its sorrow ; the de- 
fense of atrocities and illegal invasions is even 
more shocking to the moral sense than the dis- 
regard of rights.) The fact that the service- 
pension "right" was curtailed without warn- 
ing, and with the amazing assumption (if sin- 
cere) or the arrogant assumption (if a doubt or 
suspicion of the opposite remained), that the 
1 1 change will command the approval of the great 
body of devoted and able teachers," is illu- 
minated by the further fact that there is no 
mention of financial stress, no manner of admis- 
sion that even a part of the motive for abandon- 
ing a provision "that adds much to the value of 
the retiring allowance system" (Pritchett: 

1908) is the imminent stringency of funds. No! 
the reason lies wholly with the professor and his 
moral shortcomings. The professor (of the year 

1909) was informed that the rule was with- 
drawn to protect him from the wiles of the ' ' ad- 



150 CAENEGIE 

ministration ' ? which might force him out against 
his will, or use this power to interfere with 
"academic freedom' ' and "academic content- 
ment.' ' Apart from this benevolent motive, 
there is also "the tendency of the teacher as- 
sured of a retiring allowance to become ultra- 
critical toward the administration. ' ' (And a 
more heinous offense the academic world knows 
not ; observe the propriety with which the pun- 
ishment fits the crime.) The confidence of 
1908 3 in the value to a university of a set of 

3 The discoveries of 1912 make the matter more ex- 
plicit. By employing his favorite retrospective periscope, 
Mr. Pritchett finds that "the intention was in fact to 
use the rule of service retirement as a disability pro- 
vision. " To put it mildly, this statement deviates from 
the fact; the disability provision is stated distinctly and 
separately and has no more bearing upon service-retire- 
ment than upon age-retirement. Since Mr. Pritchett had 
so many good reasons for abolishing the service-retire- 
ment it was unworthy of his imagination to resort to a 
misstatement. Since teachers do not rise "above the 
appeal of self-interest ' ' and since i l after a few years of 
administration it was perfectly clear that the rule was 
doing harm rather than good, ' ' and since professors as a 
class are not worth pensioning anyhow, for men in the 
early fifties were applying for pensions "upon trivial 
and selfish grounds" (such as that they had been told 
it was honorable to accept them), why seek further? 
Here is the net issue : i * The pensions to widows have, on 
the whole, seemed to bring the largest measure of help 
and comfort with the smallest possible consequences of 
an undesirable nature." Of professors, as of Indians, 
it is true that the only good (or safe) ones are dead 
ones. 



PENSIONS 151 

men not overburdened by teaching has proved 
an illusion. (Far from spending his time profit- 
ably, the retired professor was presumably 
tempted to speculate extravagantly on Wall 
Street with his unearned gains, which however 
he received "on exactly the same basis " as his 
active salary.) That is not all. "It seems that 
this rule offers too large a temptation to certain 
qualities of universal human nature.' ' 

(Qualities so universal that they could not be 
anticipated three or four years before, and so 
disreputable that they can not be further spe- 
cified.) And the facts (Report of 1909) are 
these : that of forty men who retired on the serv- 
ice rule as many as twenty-eight failed to be 
sufficiently decrepit and senile "to strengthen 
the teaching profession." After a comprehen- 
sive study of the situation Mr. Pritchett mag- 
nanimously and discriminatingly concludes that 
a professor retiring upon two thousand dollars 
at the age of sixty-five (though safer a few years 
later when he will be less of a load upon the 
foundation) is fairly immune to the disastrous 
moral effects of a pension (protection from 
which has now become the chief solicitude of the 
foundation), but that a youth of fifty-nine 
(which is the average age of the able-bodied aca- 
demic criminals who retired while still inade- 
quately incapacitated) can not be safely trusted 
with so much money in an enforced idleness 
(since the foundation prohibits any measure of 



152 CAENEGIE 

teaching on penalty of withdrawing the pen- 
sion). Three long years of "administrative ex- 
perience" (accidentally coincident with the dis- 
covery of gross financial miscalculation) proved 
that it was a mistake to promise the privilege; 
and that it is wise and just (and benevolent) to 
remove the temptation, thereby again strength- 
ening the teaching profession. 4 

4 The reception of this reading ' ' back into the past 
intentions of the foundation its present purpose" may 
be judged by a few citations from a letter of Professor 
Lovejoy (Science, March 18, 1910). "The president of 
the foundation quotes verbatim the original service-pen- 
sion rule (which says nothing whatever about disability) 
and immediately adds the surprising comment, 'the sec- 
ond rule thus became a complex one, covering service 
and disability.' (It may be noted that the word 'disa- 
bility' was already to be found in ordinary English dic- 
tionaries in the year 1906).' ' The fact that the presi- 
dent "reflects severely upon the twenty-eight persons 
who, without disability, accepted service pensions" 
"certainly affords conclusive evidence, which should be 
pondered by professors and governing boards in 'ac- 
cepted institutions, ' that the apparently plain language 
of the foundation's rules gives no clue whatever as to 
what the officials of the foundation may subsequently 
announce that they have previously been anticipating. ' ' 
The matter of becoming "ultracritical toward the ad- 
ministration," "seems to mean, if it means anything 
either that an important proportion of the members of 
the profession are kept in order only through fear of 
losing their positions, and that, if assured of an inde- 
pendent competency, they would forthwith behave in an 
unreasonable manner; or else it means that, whether the 
criticism that might proceed from professors were rea- 



PENSIONS 153 

The embarrassment of the reviewer in speak- 
ing of any policy or principle of the foundation 
without attaching to it the vintage-date of its 
maturing is thus indicated. In the years 1912 
to 1915 there are hints of the approaching dis- 
integration of the surviving principles of the 
campaign of 1909 to 1912. As the margin be- 
tween income and expenditure shrank, it was 
found that the age of sixty-five was too low for 
safe and proper retirement ; it was found that a 
contributory pension system was the only jus- 
tifiable one, and that it was neither to the ad- 
vantage of society nor of the individual that a 
teacher be given a pension at the most pro- 
ductive period of his life, however distinguished 
his service, unless the same had been paid for 
by himself under a fair contributory system. 
It appears that it is not the income and the 
leisure that does the harm, but the circum- 
stance that (in spite of the fact that he receives 
the retiring allowance on the same basis as his 
salary (1906) — a basis that in 1912 is still earned, 
still a right, but no longer quite on the same 
basis as his salary, and in 1916 is a full-fledged 

sonable or not, they should in any case be kept silent and 
subservient by a mild form of terrorism. I can not 
think that the publication, by a person holding the posi- 
tion of the president of the Carnegie Foundation, of such 
views as this concerning the average character and self- 
respect and the proper status of the members of our 
profession, is likely to improve the public standing of 
that prof ession. ' 9 



154 CAENEGIE 

charity), he has not paid for the pension di- 
rectly from his inadequate salary. But the re- 
viewer must be careful to distinguish between 
the conclusions of 1912 and those of 1915-16. 

The warrant for the arbitrary withdrawal of 
the service-pensions is alleged to reside in the 
reservation that the trustees by a two thirds 
vote may modify the rules of retirement. 
Whether this power applies to the withdrawal 
of promised benefits can be decided only by the 
courts; such legal decisions as seem pertinent 
indicate that no such power is included. That 
the withdrawal was illegal as applied to those 
who had established a just expectation can 
hardly be questioned ; the determination of such 
a just expectation is not a simple matter. But 
it would be discreditable to the high purposes 
of the Carnegie Foundation to ask that its ac- 
tions be judged by no higher obligation than a 
minimum conformity to the letter of the law. 
There may have been available just procedures 
by which the service privilege could have been 
withdrawn and the established rights respected. 
These were not employed. A gross injustice and 
a serious moral violation affect the action as 
taken. Misleading representations of a pecul- 
iarly offensive type were used, and insult added 
to injury by impertinent aspersions and a jug- 
gling of argument which merits a phrase of 
Huxley 's : " copious shuffling. ' ' On these counts 
the foundation, by accepting the reports of its 



PENSIONS 155 

president, stands convicted. 5 The verdict is im- 
portant in view of the measures now proposed 
and pending. 

Writing in 1911 with prophetic anticipation, 
Professor Cattell said: 

It is to be hoped that when the trustees of the founda- 
tion abandon the retiring allowances at the age of sixty- 
five years, they will do so in a manner that will "encour- 
age, uphold and dignify the profession of the teacher and 
the cause of higher education. " 

The overtures of Mr. Pritchett in "A Com- 
prehensive Plan of Insurance and Annuities for 
College Teachers" 6 (1916) propose the aban- 

5 Justice requires the statement that the trustees who 
took office after 1910 should be exonerated from these 
charges; their names may be found by comparing the 
list of trustees in 1910 with the later lists. While it lay 
in their power to raise the question of the justice of the 
actions of their predecessors in office, the difficulties of 
such a step are obvious. The minority of the board who 
may have opposed the action without registering a pub- 
lie protest are entitled to like consideration. 

6 The principal reversals of policy contained in the 
"comprehensive plan" deserve to be enumerated. In 
1912 "the inauguration of a compulsory contributory 
plan would have been impossible for any outside 
agency"; in 1916 it is proposed as a just and adequate 
solution of the pension problem and one that was de- 
manded all along by a (until 1916 undiscovered) social 
philosophy. In 1912 it was not fair to ask the professor 
to contribute. Moreover, "An insuperable difficulty 
was presented by the form of the gift itself. By the 
terms of this gift, the income of the foundation was to 
be spent in providing pensions for the teachers who had 



156 CABNEGIE 

donment of the age-retirement. The plan will 
come up for action in November; the issue is 
critical. The action to be taken may lead to 
the rehabilitation of the foundation under dif- 
ferent management; or may prove to be the oc- 
casion for its last will and testament. Profiting 
by the experience of 1909, the trustees voted to 
submit the plan to all professors in associated 

served their generation unselfishly upon salaries which 
made provision for old age almost impossible. To have 
begun a system of pensions which called forth at once an 
additional expenditure on their part would have been 
repugnant to the idea of the endowment. " As is too 
familiar, the world of 1912 was a very different one 
from the world of 1916. Insuperable difficulties have be- 
come distinct obligations of the trustees; the same sal- 
aries which made provisions for old age impossible now 
make them "readily available"; "the idea of the en- 
dowment" is so elastic that what is repugnant in 1912 
is demanded by a social philosophy eagerly welcomed by 
teachers of 1916. The unselfish service of 1912 gives 
way in 1916 to the sentiment that "the possession of a 
pension or the right to possess one . . . tends to arouse 
that selfish conservatism which exists in greater or less 
measure in every human breast. " Even the professor is 
entitled to consolation; he may find it in the fate of 
Tommy Atkins: 

Then it's Tommy this, an* Tommy that, an' "Tommy 
'ow's yer soul?" 

But it's "Thim red line of 'eroes," when the drums be- 
gin to roll. 

An' it's Tommy this, an' Tommy that, an' anything 
, you please; 

An' Tommy ain't a bloomin' fool — you bet that Tommy 
sees! 



PENSIONS 157 

institutions. Disregarding the lessons of the 
past, Mr. Pritchett presents his proposals in the 
same objectionable manner that characterizes 
his past utterances when creditable reasons must 
be sought for conclusions otherwise determined 
— thus calling forth the caution of Professor 
Cattell : 

It is desirable at least to watch the Greeks, both when 
they bear gifts and when they take them away. 

There is the same copious shuffling of the 
issues, the same lack of frankness, the same as- 
sumption of benevolence of motive, the same dis- 
regard of accepted principle as of actual opin- 
ion, the same aspersions and evasions. There is 
an improvement in adroitness and plausibility, 
and a larger use of the method of presenting 
masses of sound data and deductions in a con- 
text that invites an irrelevant application. The 
task of clearing the dust-heaps and presenting 
the bare issues is much facilitated by the pro- 
tests which several universities have registered 
against the plan. 

Writing in 1909 of the repudiation of the 
promised service-retirement, Professor Cattell 
said: "This action would be incomprehensible 
if it were based on the grounds alleged by the 
president in his annual report, which has just 
now been printed. He does not even remotely 
refer to the financial inability of the foundation 
to carry out the obligations it had assumed, but 

11 



158 CABNEGIE 

bases his recommendations" upon the bad ef- 
fects of the provision. In the present instance 
the admission of financial difficulty is clear but 
hardly ample, only that "any pension system 
resting upon a fixed endowment must inevitably 
reach its limit, and that the resources of the 
foundation, and any addition likely to be made 
to them, would provide a pension system in only 
a limited number of institutions." The first 
clause does not suggest a petition in bankruptcy, 
and the second is a fixed (?) principle of the 
foundation. The irritating pretext of the ' c Com- 
prehensive Plan" 7 is that "the reason for the 
existence of such a report lies in the desire to 
correct the weaknesses of the present system, 
etc." A frank statement would place the rea- 
son in the admission that (owing to gross mis- 
calculation) the foundation can not continue 

7 The plan itself is simply described. It withdraws 
the age pension and substitutes a contributory (compul- 
sory) system in which the professor and the institution 
each pay half the cost of such combined insurance and 
of annuity after age sixty-five as each professor cares to 
pay for between certain limits (one for insurance and 
another for annuity) ; also that the plan may include 
half the annuity for the widow. The foundation pays 
the cost of maintenance, guarantees the rate of interest 
and provides for disability, though the manner of such 
provision requires more definite statement. The insur- 
ance and annuity system are to be administered by a 
sub -agency of the foundation, in which the contributors 
will be represented. A portion of every annual salary 
is thus retained for a pension, and that from the time 
of the first academic appointment. 



PENSIONS 159 

much longer the age-retirements as promised, 
even if it is prepared to exhaust principal as 
well as income, and must make no new promises ; 
that eventually additions to its resources will be 
required to meet the obligations already as- 
sumed; that it appeals to the indulgence of its 
creditors, and asks for a charitable regard of its 
imprudence; that to save what is possible from 
the impending disaster requires the cooperation 
of institutions and professors, which is now in- 
vited; and, above all, that the plan plainly re- 
linquishes very substantial benefits and substi- 
tutes limited though still desirable ones. It 
would be pertinent to add that the type of benefit 
proposed is one suitable to the cooperation of 
the foundation, but the management of which 
belongs to those affected. As a supplementary 
activity of the foundation it has much to com- 
mend it; but the presentation of the plan as 
though what it offers is a more comprehensive 
benefit and a support by the foundation of the 
associated institutions comparable to the age- 
retirement, is misleading. (That it should ap- 
peal to the non-associated institutions with no 
pension system of their own is intelligible.) To 
make a virtue of a necessity may be a wise con- 
solation; to present the necessity of restriction 
as the virtue of expansion is as unwise as it is 
unwarranted ; it is not even tempered by the ad- 
mission of responsibility for the necessity. 
To consider the "Comprehensive Plan" two 



160 CAENEGIE 

sets of data are needed, and neither is adequately 
supplied by Mr. Pritchett. The one is the extent 
of the existing obligations assumed by the foun- 
dation under the age-retirement ; the other is the 
extent of the benefit offered by the proposed 
plan to professors. The answer to the first ques- 
tion requires an interpretation of the incurred 
obligation: whether it applies to all members of 
the faculties of the associated institutions, who 
in the future may qualify for age-retirement, or 
only to those who do so within a stated period. 
Mr. Pritchett 's statement is this: 

The actuaries have suggested that men below the age 
of forty-five years could to their own advantage transfer 
from one system to the other. Whether twenty years is 
a reasonable notification of a change in the rule is a 
matter which will be considered in the most serious and 
conscientious manner by the trustees. 

A few replies from leading universities 8 are 
available; they agree that the obligation exists 
toward all members of associated institutions ir- 
respective of age. The phrase ' i to their own ad- 
vantage" is either wholly misleading, or it im- 

8 The universities referred to are Cornell, Johns Hop- 
kins, Princeton and Wisconsin; others may have replied 
or still propose to reply to the same purpose. The 
"Comprehensive Plan" was at first issued with the 
mark il Confidential, ' J and the replies bore the same 
token. When the plan itself was made public, the re- 
plies were presumably released; both are intended to 
affect sentiment. Permission to cite the replies in the 
present survey was asked and granted. 



PENSIONS 161 

plies that financial disaster is so certain that men 
under forty-five may already read on the doors 
of the foundation the warning: "All hope aban- 
don, ye who enter here." 

It is fortunate that the replies of two institu- 
tions afford the needed data. The Cornell reply 
is a model of precision and pertinence. It main- 
tains that changes in the system should apply 
only to those who become instructors in asso- 
ciated universities after the change is decided 
upon, but makes its calculations on the basis of 
obligations to those over forty-five years of age. 
After taking into acount every factor that is 
capable of reasonable estimate, the conclusion is 
reached that (extending over the term of years 
of the lives of beneficiaries pensionable under 
the limitations stated) a sum of about $25,000,- 
000 would be needed and used, principal and 
interest, in meeting these accrued liabilities. 9 
This can be done with the help of the Carnegie 
Corporation; such a solution leaves slight mar- 
gin for other service unless a financial recon- 
struction is arranged. The Cornell reply pro- 
poses : 

If relief from the burden of obligations already as- 
sumed can be secured, the foundation should (a) pay 
out of its income, under rules to be adopted, disability 
annuities to such teachers in associated institutions as 

o The sum should be decreased by an (uncertain) al- 
lowance for the forfeiture of pension by emigration to 
a non-associated institution. 



162 CARNEGIE 

have purchased and are continuing annuity contracts 
with approved insurance companies maturing at sixty- 
five to sixty-eight years of age and of $1,000 to $4,000 
in value, such disability annuities to cease when the disa- 
bility is relieved and in any event when such purchased 
annuities respectively become payable; and (&) dis- 
tribute annually to such teachers equally the balance of 
its income. 

The several protests agree that a wholly com- 
pulsory system is neither proper nor feasible; 
the institutions or individuals must have a voice 
in this determination. 

The Wisconsin reply with equal definiteness 
examines and reports upon the value to benefi- 
ciaries of the "comprehensive plan" and con- 
cludes that the saving to professors, as com- 
pared with prospects and opportunities offered 
by commercial companies, is at all events slight 
and may be problematical. The data are too 
complex for summary. The foundation is prac- 
tically limiting its benefits to a provision for 
disability (the nature of which is not fully 
stated) and for which the Cornell proposal is a 
substitute. The benefits proposed — slight or 
problematical though they are — make participa- 
tion by the institution and by the professor com- 
pulsory. For certain state institutions this will 
be legally impossible, for others practically so. 
Such compulsion sooner or later places the whole 
burden on the professor, since participation by 
the institution tends to react against advance in 
salary. The complications introduced by migra- 



PENSIONS 163 

tions from institutions with pension systems to 
those without them, and vice versa, will be dif- 
ficult to meet. The plan proposed not only in- 
troduces a different system, which is admitted, 
but justifies the abandonment of the original 
principle. 

So long as the income is used [to encourage or compel 
others 1 *)] to pay pensions to teachers who have grown old 
and have passed the period of usefulness in service, or 
to provide pensions for teachers who after long service 
are absolutely broken in health, or for the widows of 
such men, the expenditure does good, not harm. To go 
beyond this is to tread on questionable ground 
(Pritchett). 

10 The added words are inserted to apply to the situa- 
tion if or when the ''Comprehensive Plan" is adopted. 
They are not needed at present. 

The replies, in addition to giving opinions upon the 
plan proposed, urge important considerations which 
should be respected at this critical juncture. The points 
raised may be summarized: the plan as a whole is not 
feasible; the compulsory feature is especially objection- 
able; the effect will be to throw the whole support upon 
the professor; the obligation toward insurance and 
toward annuities is different; the disability provision is 
not clearly defined; commercial companies and individ- 
ual initiative are competent to supply the benefit pro- 
posed; the foundation should not enter an uncertain 
field already well occupied, and abandon its distinctive 
function; the policy of influencing the many institutions 
through the few should be maintained ; there should be -a 
contract between the professor and the foundation; the 
institutions and the professor should participate in the 
management of the foundation; all existing liabilities 
should be met without discrimination; a partial retire- 
ment should be inaugurated as an optional procedure. 



164 CABNEGIE 

It is certainly most unfortunate that the 
financial situation should so dominate past and 
present issues as to confuse where it does not 
obscure the outlook ; but that is no reason what- 
ever for the abandonment of sound principles. 
The line between what is just and wise and what 
is unjust and unwise is to be drawn precisely 
along the boundary that divides those who shape 
policy to principle and those who shape principle 
to policy. Their mutual adjustment is the re- 
curring problem of administration. Apart from 
the question of meeting obligations, the continu- 
ance of the foundation upon any useful career 
depends upon the measure of its return to the 
position which was and is its raison d'etre. In 
the financial situation there seems no other re- 
source than the Carnegie Corporation to which 
Mr. Carnegie has conveyed one-hundred-and- 
twenty-five million dollars for the purpose of 
using the income (at present about six million 
dollars annually) for the increase of the capitals 
of the five great benefactions which bear Mr. 
Carnegie's name. It is fortunate that the other 
participants in this corporation are not likely to 
require so large a measure of support as to pre- 
vent the use of the corporation to make the foun- 
dation solvent for a sufficiently long period to 
restore and shape its policy toward greatest 
benefit to the teaching profession. The full and 
frank admission of the situation is imperative. 
There must be no shuffling, though there may be 



PENSIONS 165 

slight interest in fixing responsibility. To urge 
or imply, as Mr. Pritchett does, that absence of 
accurate data was in any real sense the cause of 
the discrepancy between fact and estimate is pre- 
posterous. It is true, very true, that more is 
known than was known ten years ago of the cost 
of pensions, and much of the increased knowl- 
edge is due to Mr. Pritchett. But the estimates 
went wrong not by rods, but by miles ; how they 
were obtained or who made them is not dis- 
closed. 11 The acceptance of responsibility would 

11 Professor Love joy points out that the estimate in 
the First Report of the Foundation contains "no refer- 
ence to the all-important factor of age-distribution, ' ' 
and comments: "It would be hard to imagine an ac- 
tuarial error more glaring or more easily avoidable. M 
He adds: "This error, and the insufficiency of the 
foundation's endowment for its announced intentions, 
were clearly pointed out by Professor Cattell in Science 
four years ago, ' ' that is in 1909. Professor Cattell com- 
ments : ' ' The lack of foresight and expert knowledge dis- 
played by the president and trustees of the foundation 
is astounding. ' ' There is little evidence that these 
views, which have proved to be rather dismally prophetic, 
received proper attention or any at all. To have it im- 
plied that the trustees knew all along that their funds 
were inadequate and that they stated the fact, is mis- 
leading. To accuse men who accepted the pensions with- 
out the claim of poverty, of lack of consideration for 
their less fortunate colleagues is unfair and peculiarly 
invidious in view of the assurance of ample funds not 
only in the First Report but in the repetition of this 
assurance when the state universities were admitted and 
Mr. Carnegie added five million dollars to the endowment 



166 CAENEGIE 

be an aid in restoring confidence in future prom- 
ises. It is clear that relief from financial distress 
would not of itself restore confidence any more 
than it would confer wisdom or integrity. The 
Obstacles that stand in the way of the wisest ad- 
ministration are plainly moral ones. If the 
foundation can escape the desire to control, can 
avoid the temptation of justifying actions by 
specious reasons, can freely entertain any plan 
or suggestion conducive to its true function, can 

for this purpose. In the letter of gift it is stated that 
"expert calculation shows that the revenue will be 
ample' ' "to provide retiring pensions for the teachers 
of universities, colleges and technical schools in our 
country, Canada and Newfoundland " ; and in Mr. 
Pritchett 's words : ' ' It may therefore be safely assumed 
that while the income of the foundation is sufficient to 
carry out the original plan of the founder, it is not suffi- 
cient to extend the system of pensions, at least at first, 
beyond the scope which he indicated in his letter of 
gift." In 1908 Mr. Carnegie wrote to Mr. Pritchett: "I 
understand from you that if all the state universities 
should apply and be admitted five millions more of five 
per cent, bonds would be required. 9$ Under the rules 
then operative and in the light of the draughts upon the 
funds then secured, these statements are so wide of the 
mark that if increased five-fold they would still be ques- 
tionable in a twenty-year prospect. The gross nature of 
the miscalculation as well as the responsibility for it 
should be clearly noted. Moreover the slur upon those 
who accepted pensions without the plea of distress, is 
another instance of reading implications into statements 
after the event. Poverty, like disability, is shuffled into 
the requisite justification for accepting an earned pen- 
sion, as relief replaces reward in the conception. 



PENSIONS 167 

give to the teaching profession the full partici- 
pation in its measures that the trust implies ; if, 
in brief, the attitude and perspective of obliga- 
tion are firmly fixed, the outlook, however dismal 
at present, holds promise for the future. It is 
for this reason that emphasis must be placed 
upon principle and that the proof of violation 
of principle is demanded in convincing meas- 
ure. No mature moral sense is interested in 
fault-finding beyond the demonstration of guilt. 
The constructive program of the foundation is 
the central interest of this review. 

What should the foundation have done, and 
what can it do to carry out the high purpose and 
distinctive mission which it accepted under fa- 
vorable auspices ten years ago? What are the 
conclusions to be drawn from its unfortunate 
history? At no point is the reviewer's respon- 
sibility more exacting than in the attempt to an- 
swer these final, practical and comprehensive 
questions. The considerations may be presented 
serially. 

1. A prompt return and fixed adherence to 
first principles is imperative. Mr. Pritchett's 
original statement is pertinent and sound. "In 
the long run, men's personal preference for the 
work of the teacher . . . can not be depended 
upon to secure an adequate supply of the best 
men. This fact the older European countries 
long ago recognized, and in order to secure for 
the place of teacher the best men, they have 



168 CARNEGIE 

sought to dignify the profession of teacher by 
the highest social and official honors; and they 
have sought in addition to strengthen it by larger 
financial rewards/' And inasmuch as "the sal- 
aries of the teachers can not be made equal to 
those of outside professions this reward has 
come, in the main, by the establishment of a sys- 
tem of pensions. ... In other words, the first 
and largest ground for the establishment of 
systems of retiring pensions for teachers has 
been found in a wish to strengthen the teaching 
prof ession. ' ' The direct bearing of this conclu- 
sion is that the retiring allowance shall influence 
the professor in his career. The foundation has 
insisted upon complete retirement; this is a 
serious mistake. As Professor Cattell has sug- 
gested, the foundation takes away half a man's 
salary and all his occupation ; it should give him 
all his salary and relieve him of half (the bur- 
densome portion) of his duties. Naturally the 
allowance would continue (in some form) for 
life, in view of the fact that it comes as a right, 
earned in the process of earning the salary ; for 
the salary itself is but a means of support to 
make possible the devotion to the intellectual 
life. Neither salaries nor pensions should be con- 
sidered in commercial or irrelevant terms. The 
question of the best provision with the available 
resources to secure the ripest fruits of individual 
attainment between the ages of fifty and sixty- 
five or seventy is too complex to be included in 



PENSIONS 169 

this discussion. The vital point is to recognize 
that here above all lies the great opportunity of 
the foundation to support and cooperate with 
the universities in remedying the most glaring 
and wasteful defect in the academic economy. 
There has been too much endowment for build- 
ings and institutions and too little endowment 
for men. The professor is inevitably institution- 
alized ; yet institutions are but opportunities for 
the right men. To strengthen the teaching 
professions means to influence directly the pro- 
fessorial career. The provision must be con- 
ceived in a far larger and more sympathetic 
spirit than appears in the service-retirement 
rule, which was acceptable only as an indica- 
tion of the recognition of a need. It must be 
administered in a spirit the very opposite of that 
which has obtained. To abandon the essential 
conception because the mode of expressing it 
was inadequate is like poisoning a patient be- 
cause the first treatment proved unsuited to 
the case. A further important provision must 
be reinstated from the original rules; that of 
leaving the initiative and the choice of time 
and manner of retirement with the individual. 12 

12 Since the time and manner of retirement is the 
point of emphasis, the First Report may again be cited: 
"The question as to the age at which a professor shall 
retire is a matter entirely between him and the institu- 
tion with which he is connected. ' ' It was this provision 
of the twenty-five year service retirement that proved its 
pertinence; for it allowed one to retire at a period de- 



170 CARNEGIE 

Many men would prefer to teach in full service 
until they are ready to retire completely ; others 

termined by the complex circumstances of the case. At 
the same time the absolute prohibition of teaching lim- 
ited the manner of retirement, while a part-time ar- 
rangement would have given the desired elasticity. It 
thus becomes clear that when the service retirement was 
withdrawn a double injury was done, since now the 
foundation insisted that the professor must teach until 
the age of sixty-five. As the result of persistent appeal 
two small concessions have been grudgingly allowed. 
The first permitted universities to retire men and carry 
the allowance a few years in advance of the retiring age; 
the later permitted a part-time arrangement without 
diminution of pension at age of sixty-five. All these ar- 
rangements are affected by the same drawback: that so 
few men can afford to take advantage of them. It is 
only the more fortunate who can live adequately upon a 
diminished income. The one central need is not met. 
Professor Hobbs has called attention to the importance 
of early and partial retirement as a means of freshening 
the profession; he rightly asserts that a man's optimum 
teaching period is limited, while the type of intellectual 
service that he can best perform is unprovided for. All 
arguments point to the importance of influencing the 
careers of professors and not merely to the relief of old 
age. It is also worth noting that the qualification for 
retirement has not been changed. Twenty-five years of 
service entitles one to a pension, which one does not re- 
ceive until the age of sixty-five; the widow receives it in 
case of the professor 's death. Whether a professor could 
claim a pension if he changed his profession after 
twenty-five years of teaching is a matter that only the 
courts can decide. Rules can not be changed retroac- 
tively to the disadvantage of beneficiaries. It is in many 
ways regrettable that the legality of certain of the foun- 
dation 'a changes has not been tested in court. 



PENSIONS 171 

would not. The system should be elastic, and no 
undue pressure exerted either by an outside 
agency or the university. The university re- 
tains an interest and a right to maintain its in- 
struction at the proper standard ; but retirement 
should not be an administrative decision, deter- 
mined by administrative interests. Until the 
funds of the foundation are used in furtherance 
of the direct strengthening of the teaching pro- 
fession by providing for at least the ripest period 
of scholarship something approaching the con- 
ditions under which many European professors 
spend the greater portion of their lives, its most 
significant and important function will not be 
exercised. 

2. Hardly second in importance is a conclu- 
sion of quite different bearing. The history of 
the decade emphasizes what the academic world 
is learning slowly in many directions: the dan- 
gers of the administrative attitude and control. 
If there is one institution above all in which aca- 
demic considerations should be decisive, the 
foundation is that one. The funds belong to 
the teaching profession and should be adminis- 
tered by the profession for the profession. An 
external board of trustees is an anomaly. The 
contention that a board composed largely of col- 
lege presidents is not external in the sense in 
which a lay board would be, is just. There 
should be college presidents upon the board to 
represent the administrative interests; just as 



172 CARNEGIE 

there should be financiers to represent the finan- 
cial interests. All the members of the board 
should hold office as the choice of the professors 
and institutions concerned. It is a great satis- 
faction to note that such a plan of government 
was precisely what Mr. Carnegie provided. The 
deed of gift provides that each participating in- 
stitution shall have a vote in the election of trus- 
tees; 13 this vital provision was set aside with no 

13 There is a strange incident in the history of the 
foundation that may pertinently be recalled. Early in 
its career, yet with the financial uncertainty already 
present to a proper foresight, the maximum allowance 
was increased from $3,000 to $4,000. This increase 
could affect only salaries of $5,300 to $7,200 on the age 
basis, and of $6,800 to $9,200 on the service basis then in 
operation. Such salaries are presidential rather than 
professorial; it would be interesting to know what pro- 
portion of the men affected by the change participated 
in the extension of liberality. The incident is thus com- 
mented upon by Professor Cattell: "It is certainly odd 
that a board of trustees consisting of university and col- 
lege presidents should increase the maximum pension 
from $3,000 to $4,000, which can practically only be of 
advantage to the comparatively high-salaried president, 
and should retain the privilege of retiring after twenty- 
five years, when this is denied to the professors through 
the financial inability of the foundation. But perhaps 
they assume that higher education can be best advanced 
by retiring the president whenever possible. " The 
financial inability is not mentioned by Mr. Pritchett, but 
is admitted by President Jordan, who also prints the 
actual resolution which was adopted, while the Report 
prints the resolution in a form containing several serious 
disagreements. In abolishing the service-pension the 



PENSIONS 173 

more explanation than these words : " In view of 
the desirability of a permanent, self-perpetuating 
governing board, the provisions of this para- 
graph' ' (which provided that "each institution 
participating in the fund shall cast one vote for 
trustees,' ' the trustees to serve for five years 
and be eligible for reelection) "were, upon the 
advice and with the consent of Mr. Carnegie, 
omitted from the act of incorporation which 
forms the present charter of the foundation" — 
and by this step autocratic misrule was made 
possible. It is in many ways humiliating that a 
body of men worthy of the esteem of the foun- 
dation to the extent of receiving its benefits, 
should be unrepresented upon the governing 

executive committee was instructed to tl safeguard the 
interests" of competent professors engaged in research, 
of those whose service included service as a college presi- 
dent; and of those expecting benefits in 1910. The reso- 
lution in the report makes of the first a "rare" pro- 
fessor, repeats the second with the assumption that 
presidents are also distinguished, and omits the third. 
A few years later this unfortunate discrimination be- 
tween presidents and professors was withdrawn, but not 
before it became known (the knowledge pointing to a 
breach of confidence) that a pension applied for on this 
ground had been refused to a former college president 
then entering upon a campaign for high political office. 
In 1916 Mr. Pritchett is prepared to admit that "it 
seems doubtful whether the change was desirable. " 
The question recurs: Would errors of judgment of this 
nature, which so soon require correction, have occurred 
if professors had been as well represented upon the board 
as were presidents? 

12 



174 CAENEGIE 

board. Mr. Pritchett's attention has been called 
to this grave defect, but without avail. If every 
vacancy that has arisen in the board had been 
filled by electing a professor, there would at 
least have been evidence of a democratic inten- 
tion and an opportunity for the presentation of 
the professorial point of view. Nothing less 
than a majority of professors upon the board 
and a control by the professors of election to the 
board will be a permanently satisfactory ar- 
rangement. It may be assumed that if the orig- 
inal provision had been retained, or if professors 
had been represented upon the board, the serious 
errors of the foundation and the violation of 
pledges would not have occurred. 

It is not implied that professors — even the 
select ones who would be honored by their col- 
leagues for such office — would be possessed of 
greater foresight or a more rigid conception of 
moral obligation, than is true of a group of col- 
lege presidents. It is implied that the perspec- 
tive of interest and obligation of the two is meas- 
urably different. Under ideal conditions this 
would not be the case; under actual conditions 
it is the case. And yet it is not easily intel- 
ligible how a group of men whose positions form 
a richly adequate warrant for their ability and 
responsibility have come to acquiesce in a series 
of decisions and statements that have estranged 
the teaching profession from an institution de- 
signed particularly for its benefit. The dif- 



PENSIONS 175 

ficulty must lie in the manner of direction which 
"offers too large a temptation to certain qual- 
ities of universal human nature, ' ' which may be 
further specified, while yet denying that they 
are universal. College presidents are exposed 
to the emphasis of administrative decisions, 
which under pressure, great or slight, tend to 
become autocratic ; they are under temptation to 
substitute expediency for principle; they too 
commonly drift away from the academic point 
of view; in the present relation they are prone 
to consider benefit to the institution (in relief of 
financial strain) rather than provisions for men; 
appreciating in their official relations the value 
of acquiescence and the importance of leaving 
the direction of affairs to those in official posi- 
tions, they may lose the critical sense in apply- 
ing this policy to the president of an institution 
which they direct and who also shares the tradi- 
tions of the presidential office. If such consid- 
erations in part remove the burden of respon- 
sibility from individuals, they place it the more 
directly upon the system that invites such ac- 
quiescence. The personnel of the board con- 
tains men who may confidently be counted upon 
to protect academic interests and who might 
readily owe their places to a professorial elec- 
tion. What manner of protest or objection they 
raised, we do not know; the majority action 
stands. One may be assured that under dif- 
ferent leadership they would have served the 



176 CABNEGIE 

cause of education as faithfully in this as in 
other relations. 

If the restoration of the original purpose of 
the foundation can be brought about (and in 
a manner suitable to actual conditions as re- 
vealed in the last ten years), and if professors 
can be given a directive voice in all future de- 
cisions, there is reason for hope that the mis- 
takes of the past may be atoned and the activi- 
ties of the foundation shaped to a permanently 
useful function. These two desiderata stand 
conspicuously in the foreground of the present 
perspective. Other provisions helpful to such a 
consummation should not be overlooked. 14 

3. The question of financial resources and of 
the relations of funds to a system of benefits 

14 It is no more pertinent in one connection than in 
another to emphasize that fixity of policy is itself of 
permanent value. The foundation should determine its 
policies and adhere to them. The uncertainty incident 
to frequent change undermines confidence. Changes of 
the order involved are not due to the lessons of experi- 
ence (however plausible it may be to refer them to such 
source) ; they indicate an original lack of judgment and 
foresight or a too ready yielding to expediency, and in 
either case a lax hold upon the loyalty to principles. At 
all events the changes of heart would be more convinc- 
ing if the reasons assigned for the changes and the 
changes themselves were more consistent. Some assur- 
ance of a relatively permanent policy is to be expected 
at the present crisis. The First Keport is, as usual, clear 
and correct: retiring allowances were to be voted "in 
accordance with a fixed set of rules and upon a fixed 
plan. ' ' 



PENSIONS 177 

must be considered together. The policies that 
hastened the period of financial embarrassment 
were, first of all, the admission of too many in- 
stitutions; secondly, the liberal extension of 
pensions to individuals in non-accredited insti- 
tutions. The motives leading to the latter step 
were wholly commendable from the point of view 
of relief, and doubtless a wise discrimination 
was exercised in a difficult apportionment. Such 
grants would bring home to a considerable num- 
ber of institutions the importance of providing 
retiring allowances. It is merely unfortunate 
that the purpose could not be thus extended; 
between definite expectations and these specially 
voted benefits there can be no question of pre- 
cedence. The grants to individuals outside of 
accredited institutions have been withdrawn, 
and were withdrawn frankly for financial 
reasons. 

The remedy for the error of admitting insti- 
tutions too freely can not be simple. The liabil- 
ities obtain equally among the seventy-three in- 
stitutions, and there are a number of others that 
have qualified or are about to do so, whose 
claims can not be denied without questionable dis- 
tinctions. The original estimate of a group of 
one hundred to one hundred and twenty institu- 
tions was far too large; forty institutions (in- 
cluding the leading state universities) would 
still present serious but perhaps not insoluble 
financial difficulties, and would be a large 



178 CAENEGIE 

enough number to establish the practise of re- 
tiring allowances and to influence opinion. It 
is doubtful whether the foundation can under- 
take more than this under any program within 
its scope; though it might aid in the establish- 
ment of a system such as the "Comprehensive 
Plan," for institutions not on its associated list. 
Clearly the actual program which it announced 
was impossible with the funds available. 

That its impossibility was not foreseen at the outset 
by the officials of the foundation is amazing (Love joy). 

The foundation definitely adopted the policy 
of influencing the many through the few. This 
is well stated in the first report in which the 
force of example is emphasized ; it is restated in 
later reports. In 1912 Mr. Pritchett said: 

I .think, however, that it is clearly admitted by all 
teachers that a few hundred adequate pensions at the 
service of teachers is far better than some thousands of 
very small pensions. . . . The trustees have felt sure that 
it was better to establish a fair retiring allowance sys- 
tem in a limited number of colleges than a very poor 
system in a large number. 

In 1916 one of the chief "weaknesses" of the 
system is that it is limited; and the assurance 
has become a question "whether the foundation 
shall cooperate in a system of pensions avail- 
able to the great body of teachers or whether it 
shall, on the other hand, pay the entire cost of 
retiring pensions for a comparatively small 
group of teachers"; it is urged as a reason why 



PENSIONS 179 

the foundation can not ask of the corporation 
adequate aid that the system is available u to a 
very limited number of institutions. ' ' Had Mr. 
Pritchett submitted the question he would have 
found little support for his change of view. The 
Wisconsin reply emphasizes the fact that the 
indirect benefit is greater than the direct, that 
the support of strong institutions is the correct 
mode of influence, while Mr. Pritchett 's reports 
of pension provisions stimulated by the founda- 
tion is certainly gratifying. 

The question of limitation isi fundamental 
and is the critical issue which fixes the financial 
program; it also determines the equally funda- 
mental question of cooperation. All this was 
decided in 1906. The embarrassment results 
from an attempt to reverse the policy, which 
confuses the essential relations. Cooperative 
plans were doubtless considered when the orig- 
inal system was adopted; if so, they were re- 
jected. If they were rejected for the right rea- 
sons, these reasons still hold. If they were re- 
jected for wrong reasons, the mistake should be 
admitted and the desirable type of cooperation 
established. One can not but suspect that the 
desire for control played a part in the decision; 
for taxation means representation, and the rep- 
resentative principle was extracted from the 
government at the outset. The central agency 
that establishes the system must either assume 
the cost, or at the time of establishment (which 



180 CABNEGIE 

means for each institution the time of its admis- 
sion) provide for such cooperation as may be 
demanded and accepted; for this is part of the 
contractual nature of the relation. Though it is 
without warrant to impose cooperation such as 
the "Comprehensive Plan" proposes, the uni- 
versities in their effort to reinstate the founda- 
tion will unquestionably be as liberal as possible 
in facilitating the consummation in which they 
have a common interest. Institutions and pro- 
fessors must demand a voice in the conduct of 
affairs, and not be misled by any partial control. 
It is out of the question that the institution 
should pay half the cost and the professor the 
other half (in the end the professor will pay 
the whole), while the foundation assumes the 
incidental fees and some form of disability 
benefit. Mr. Pritchett's sustained admiration 
of the "comprehensive plan" which so miracu- 
lously multiplies the loaves and fishes is hardly 
justified. If one could induce two benevolent 
agencies jointly to pay one's bills, living on one's 
salary would be a simple accomplishment. The 
role of residual benefactor is an agreeable one, 
especially if it retains the direction of the bene- 
faction and the sense of providing the benefits 
paid for by others. The consolation that the 
transfer of obligation rests upon "a true social 
philosophy" should not be harshly disturbed. 

It is hardly to be expected that the trustees 
will determine all the pending issues at the meet- 



PENSIONS 181 

ing in November ; it is least of all to be expected 
that they will adopt the ' ' Comprehensive Plan. ' ' 
They may be expected to reach decisions affect- 
ing all future actions and policies. Not alone 
must the foundation be reconstructed financially, 
but it must regain the confidence of the pro- 
fessors for whose benefit it exists. Professor 
Lovejoy wrote in 1910: 

There seems grave reason to conclude that it is time 
for the rank and file of the teaching body to demand 
that the management of the Carnegie Foundation shall 
be altered in whatever manner is necessary in order to 
protect them against the sort of deception and the sort 
of indignity to which they have been subjected in the re- 
cent administration of this potentially beneficent insti- 
tution. 

This is strong language, but has amply re- 
ceived since 1910 what measure of justification 
it may then have lacked. It is too much to ex- 
pect that the desirable relations of the founda- 
tion to its beneficiaries can be restored until a 
distinct indication of a change of heart and mind 
appears. Upon the successor of Mr. Pritchett 
will devolve the difficult task of reconstruction. 
His first requirement is the possession of the 
confidence of the teaching profession. The trus- 
tees should realize — each for himself and col- 
lectively — that at present no such confidence ex- 
ists, and that in its place there exists a serious 
distrust that finds its justification in past deeds 
and words. The clearest manifestation that the 



182 CARNEGIE 

trustees could give of their desire to serve the 
trust which is committed to them is to provide 
for an immediate participation (in the Novem- 
ber discussions) of duly accredited representa- 
tives of the teaching profession; the natural 
medium for this is the American Association of 
University Professors. They should provide 
for a permanent representation of professors 
on the board. Trustees with no very distinctive 
interests to represent and who have enjoyed the 
office for ten years can in no better way show 
their appreciation of the situation and their 
loyalty to the teaching profession than by re^ 
signing their offices (now held for a double term 
according to the first plan) to such professors 
as may be nominated by representatives of the 
teaching profession and elected by the trustees. 
Such a proposal is neither impractical nor pre- 
sumptuous ; it is merely a return to the original 
plan and the original principle. 

Crises, as current comment indicates, bring 
forth the heroic qualities and the spirit of sac- 
rifice. May they do so upon this occasion. 15 

is While the reviewer aims to present opinion as ob- 
jectively as the outlook which he commands makes pos- 
sible, the individual angle as well as the personal organ 
of vision determines the perspective. He may be per- 
mitted to refer to the evidence of his good will toward 
the foundation and its officials as well as its projects. 
When the foundation was inaugurated, and at the dis- 
tinctive stages of its career, he wrote editorially and over 
his signature in high commendation of its projects and 



PENSIONS 183 

with a sincere faith in its mission. In connection with 
a plea for the admission of the state universities he re- 
viewed the general purpose of the foundation (North 
American Review), and indicated the significance of 
what it had done and proposed. The task now imposed 
upon him is not sought, nor is it agreeable. One of the 
chief reasons why he felt it incumbent to accept the ob- 
ligation is that he could refer to his past expressions as 
evidence of an original good will and high opinion of 
the foundation and its direction. The responsiblity he 
has tried to share by citation of others' views; he ac- 
cepts the full responsibility for the opinions and conclu- 
sions expressed. 

Since this review was written, the "comprehensive 
plan" has been attacked upon its actuarial side, and 
that in several aspects. To one of these criticisms the 
secretary of the Carnegie Foundation has replied in a 
manner which implies that the arrangements for adopt- 
ing the plan are going forward. Such a procedure would 
be as unfortunate as it would be unjust. The importance 
of arousing the professorial sentiment and the public 
interest in the impending issue is thus emphasized. 



REPORT OF THE COMMITTEE OF THE 

AMERICAN ASSOCIATION OF UNI- 

VERSITY PROFESSORS ON PEN- 

SIONS AND INSURANCE* 

In March, 1916, President Pritchett of the 
Carnegie Foundation for the Advancement of 
Teaching submitted to the teachers and the 
presidents of educational institutions associated 
with the foundation a report entitled "Compre- 
hensive Plan of Insurance and Annuities for 
College Teachers." Teachers in associated insti- 
tutions were invited to submit suggestions and 
criticisms with respect to the proposed plan, and 
the report itself asked the cooperation of every 
teacher and president in the associated institu- 
tions in determining the question "whether the 
fundamental principles set forth in the report 
are those upon which sound pension administra- 
tion and legislation must rest. ' ' This invitation, 
as well as the fact that the report proposes radi- 
cal changes in the relationship existing between 
the foundation on the one hand and the asso- 
ciated institutions on the other, vitally affecting 
all university teachers in the United States, led 
to the appointment of this committee on pensions 
and insurance to investigate and report upon 
the proposals contained in President Pritchett 's 
report. 

1 Printed in School and Society, December 2, 1916. 

184 



PENSIONS 185 

"Without attempting to state in detail the com- 
prehensive plan of insurance and annuities for 
college teachers, it may be said briefly that in 
substance the plan proposes: 

(a) The abandonment of the plan adopted by 
the foundation ten years ago of providing for 
teachers in accepted institutions a retiring al- 
lowance to be paid during life, following the age 
of retirement, which is now fixed by the rules of 
the foundation at a minimum of 65 years. The 
suggestion is made that since the adoption of 
the existing plan has created to some extent the 
just expectation of a retiring allowance on the 
part of teachers in accepted institutions, this ex- 
pectation will be fully met in the case of all 
teachers in accepted institutions who are over 45 
years of age, but that teachers under that age 
may profitably transfer to the proposed plan of 
insurance and annuities ; and there is an intima- 
tion that this transfer may be made by action of 
the foundation, without the prior assent of the 
individuals affected. 

(&) The substitution for the existing plan of 
the proposed comprehensive plan for insurance 
of college teachers, which in substance is a plan 
for insurance for college teachers until age 65, 
combined with the payment of annuities to 
teachers after age 65, or to their widows in the 
event of their death after reaching that age. 

(c) The establishment of a plan for the pay- 
ment of disability allowances, defined as follows : 



186 CARNEGIE 

In case of a teacher holding a contract for insurance 
and annuity, whose health completely fails after a serv- 
ice of 15 years as professor, or 20 years as professor 
and instructor, the foundation would at its own cost con- 
tinue to pay during the period of his disability the 
premiums on his life insurance policy and also a mini- 
mum pension of $1,200 a year. 

It is proposed that the cost of insurance and 
annuities be borne one half by the teachers them- 
selves and one half by the educational institu- 
tions to which the teadher is attached, and that 
the benefits of the plan be extended generally to 
teachers in institutions of higher learning in the 
United States and Canada. 

The contribution of the Carnegie Foundation 
to the proposed plan is the cost of administra- 
tion of the plan, provided the surplus from in- 
surance and annuity funds is proved insufficient 
for that purpose, and the guarantee of an inter- 
est return upon all invested insurance and an- 
nuity reserve funds of 4| per cent, per annum; 
and it is suggested that the foundation may bear 
the cost of the disability allowance as above sug- 
gested. 

I 

It will be observed that the essential element 
in the proposed change of plan is the transfer 
of the financial burden of making provision for 
members of the teaching profession, whether by 
pension or otherwise, from the foundation to the 
teachers themselves and to the institutions with 



PENSIONS 187 

which they are associated, and that so far as the 
foundation itself makes any contribution to the 
proposed comprehensive plan, that contribution 
is to be spread out over so large an area as to 
make the benefits which it offers to any individ- 
ual so slight as to be almost negligible. 

President Pritchett's report makes it plain 
that the Carnegie Foundation has not sufficient 
financial resources to enable it to carry indef- 
initely the burden of the system which it has es- 
tablished. Under ordinary conditions, this 
might be deemed a sufficient reason for aban- 
doning the existing plan and make it unneces- 
sary to discuss the other reasons suggested in the 
report for proposing such action. It appears 
from the report, however, that the Carnegie Cor- 
poration, an institution quite distinct from the 
Carnegie Foundation, has abundant funds which 
may be used for maintaining the existing sys- 
tem, although it is not bound to make such use 
of them. Since, therefore, abandonment of the 
plan may not be a financial necessity, and as the 
other reasons urged for its abandonment raise 
questions which are fundamental in the consid- 
eration of any plan for the financial benefit of 
the teaching profession other than by direct pay- 
ment of salary, it is desirable that we should 
comment upon them very briefly. 

On page 54 of President Pritchett 's report he 
states in summary form his reason for believing 
that the existing pension system should be aban- 
doned, as follows : 



188 CABNEGIE 

The fundamental defect in the existing pension sys- 
tem lies in the assumption that free pensions for college 
teachers would be permanently justified. In the light of 
ten years of experience and in the light of the experi- 
ence of European pension systems, this assumption seems 
to rest upon a defective social philosophy. No perma- 
nent advantage will accrue to any calling or any profes- 
sion by lifting from the shoulders of its members a load 
which under moral and economic laws they ought to 
bear. 

It is to be noted that in reaching this conclu- 
sion emphasis is placed on the argument that it 
is the "free" pension which is based on a de- 
fective social philosophy, for elsewhere in his 
report (page 12) President Pritchett reaches 
the conclusion that a pension system for the 
benefit of teachers is ' ' demanded from the stand- 
point of a just and humane social philosophy. ' ' 
He enumerates the reasons which may be urged 
for the establishment of a pension system for 
teachers as follows (pages 12, 13, 14) : 

1. The altruistic character of the teachers' 
profession. 

2. The poverty of the teaching profession. 

3. That a pension system is the only humane 
and feasible method by which aged and worn- 
out teachers may be removed from the service. 

4. The fact that college and university teach- 
ers as a class are separated from the usual com- 
mercial avenues of investment. 

5. That college teachers constitute a group 
of employees in the economic sense, and that it 



PENSIONS 189 

is practicable to unite them for common pro- 
tection. 

6. That the maintenance of a pension system 
for college teachers has some effect in bringing 
able men into that calling. 

While President Pritchett repudiates the first 
two of these reasons as offering any basis for a 
pension system, he accepts the others as justify- 
ing and requiring ' ' the establishment and main- 
tenance of a pension system for college teach- 
ers" (page 15). 

While some of these reasons have at various 
times been advanced as a justification for the 
establishment of a pension system for college 
teachers, it may fairly be said that they do not 
singly or collectively state the reasons which 
were given, either by Mr. Carnegie or President 
Pritchett, upon the establishment of the Car- 
negie Foundation system of pensions ten years 
ago. The reason then urged for the establish- 
ment of the pension system was that by its es- 
tablishment the cause of education would be 
aided by adding in substance to the remunera- 
tion of teachers in the form of a retiring allow- 
ance. And this allowance was established on 
the theory that, since it was in effect one form 
of remuneration, it was giving to the teacher 
something that he was entitled to receive, thus 
adding to the dignity and security of the teach- 
ing profession and contributing to the cause of 
education. 
13 



190 CABNEGIE 

Mr. Carnegie in his letter of April 16, 1905, in 
which he announced to the first board of trus- 
tees of the foundation the purpose of his gen- 
erous gift, opens with the sentence : 

I have reached the conclusion that the least rewarded 
of all the professions is that of the teacher in our 
higher educational institutions. 

President Pritchett in his First Report said 
(page 1) : 

It had for a long time prior to the establishment of 
this foundation been evident that the time was approach- 
ing when, for the sake of education no less than of the 
teacher, the remuneration of the teacher's calling must 
be increased. 

and on page 2, 

This gift to higher education was received with gen- 
eral approval. It was universally admitted that no wiser 
attempt could have been made to aid education than one 
that sought to deal in a wise and generous way with the 
question of the teacher's financial betterment. 

And on page 31 — referring to European ex- 
perience it is said — 

And inasmuch as the salaries of the teachers can not 
be made equal to those of outside professions, this re- 
ward has come, in the main, by the establishment of a 
system of pensions to be paid to the professors them- 
selves, to their widows and their orphans. In other 
words, the first and the largest ground for the establish- 
ment of systems of retiring pensions for teachers has 
been found in the wish to strengthen the profession of 
the teacher. 



PENSIONS 191 

On page 37, it is said : 

It is true that the real teacher finds in the joy of 
teaching his chief reward. The same thing is true of 
the highest class of men in any profession; but it is also 
true that as the rewards and the honors of a profession 
increase, it will become more attractive to men of ability, 
strength and initiative. In other words, the chief value 
of the establishment of a system of retiring allowances 
to the teacher in the higher institutions consists in the 
lifting of this uncertainty regarding old age or disability, 
in the consequent lightening of the load of anxiety, and 
in the increasing attractiveness of the professor's life 
to an ambitious and enlightened man. All this tends to 
social dignity and stability. 

And in answer to the question ' ' How this fund 
may be so used as ... to strengthen the gen- 
eral interests of education?" President Prit- 
chett says (page 37) : 

With regard to the second question, it is evident to the 
trustees that, to better the profession of the teacher and 
to attract into it increasing numbers of strong men, it 
is necessary that the retiring allowance should come as 
a matter of right, not as a charity. ... It is essential 
in the opinion of the trustees that the fund shall be so 
administered as to appeal to the professors in American 
and Canadian colleges from the standpoint of a right, 
not from that of charity, to the end that the teacher 
shall receive his retiring allowance on exactly the same 
basis as that upon which he receives his active salary, 
as a part of his academic compensation. 

It is upon these two fundamental principles that the 
trustees and the executive committee have sought to 
build; and their whole effort has had for its aim the 
establishment in America, using that term in its widest 



192 CARNEGIE 

sense, of the principle of the retiring allowance in in- 
stitutions of higher learning, upon such a basis that it 
may come to the professor as a right, not a charity. 

In the Second Annual Report of the Founda- 
tion, in a chapter entitled ' ' The Carnegie Foun- 
dation, Not a Charity but an Educational 
Agency," it is stated (page 64) : "that the re- 
tiring allowance must come as a right not as a 
charity; a thing earned in the regular course of 
service, not a charity. ' ' 

It would be easy to multiply quotations from 
the annual reports of the Carnegie Foundation 
to show that the original conception of the pen- 
sion plan adopted by the foundation took very 
little account of the reasons which President Prit- 
chett's report now states justify and require the 
establishment of a pension system — see "Com- 
prehensive Plan of Insurance and Annuities" 
(page 15). Its principal aim, clearly and re- 
peatedly enunciated, was to promote the cause 
of education by increasing the security, the dig- 
nity and the economic attractiveness of the 
scholar's calling, through the addition of cer- 
tain forms of deferred salary to the teacher's 
eventual compensation. And this, so far as 
known to the teaching profession, has continued 
to be its aim until the publication of the "Com- 
prehensive Plan for Insurance and Annuities 
for College Teachers. ' ' 

The plan for retiring allowances thus con- 
ceived was put into operation. The teachers in 



PENSIONS 193 

accepted institutions and the educational world 
in general have accepted it in the spirit in which 
it was created. The Carnegie pension has not 
been regarded as a charity, the recipient of it has 
had no thought that he was receiving something 
for which he had given nothing. He has felt no 
embarrassment in receiving it, even though he 
might possess independent means. 

It has remained for President Pritchett in 
1916 to inform the recipients of the Carnegie 
pension that the pension is a " very gracious and 
noble charity' ' (page 54) and on page 56 of his 
report he states that the payment of a pension 
under such circumstances is an "embarrassing 
use of trust funds." This can be the case only 
when the original purposes of the pension sys- 
tem established by the foundation are completely 
lost sight of. 

If the Carnegie pension is a form of compen- 
sation, as it was intended to be at the time of 
its establishment, and as we believe President 
Pritchett establishes that it is or tends to become 
in his discussion of the topic "Are pensions 
wages?" (page 34 of the report), then the only 
substantial social or economic question requiring 
to be answered in determining the desirability of 
the existing pension system is whether the Amer- 
ican college teacher in receiving a Carnegie pen- 
sion is receiving excessive compensation. 

This was emphatically answered in the nega- 
tive by the founder and by all those who were 



194 CABNEGIE 

i 

associated in the work of establishing the exist- 
ing system, and we do not believe that the ques- 
tion is one which now merits serious debate or 
would receive any different answer if its consid- 
eration were dissociated from the immediate 
financial problem of the foundation. 

The fact that this compensation in the form 
of a pension is not received directly from the 
educational institution to which the teacher is 
attached does not appear to us to alter the case. 
The compensation of the teacher, whether paid 
by his college or university or by the Carnegie 
Foundation, has its ultimate source in benev- 
olence, at least in the case of all institutions 
which do not receive state aid. A pension con- 
tributed to by the university whose only source 
of funds is private benevolence is a "free" pen- 
sion to the same — but no greater — extent as if 
the contribution were made by the Carnegie 
Foundation or any other benevolent institution. 
The proposed change of plan, therefore, in so 
far as it shifts the burden of providing a pension 
allowance, or annuity to the colleges or univer- 
sities, does not appear to us to be based upon an 
essentially different social philosophy from that 
on which the existing system of Carnegie pen- 
sions is now based, and, in so far as it transfers 
the burden to the individual instructors, it ap- 
pears to us to be in effect a reduction of the com- 
pensation to which they have heretofore justly 
regarded themselves as entitled, in the form of a 
pension i { as a right, not a charity. ' ' 



PENSIONS 195 

We believe that the original conception of the 
pension system adopted by the Carnegie Foun- 
dation, as an aid to education through the in- 
crease of compensation to the teacher, was based 
upon sound social and economic principles. It 
would not have been essentially different in prin- 
ciple had the Carnegie Foundation made addi- 
tions to the permanent endowment of the sev- 
eral accepted institutions for the purpose of in- 
creasing salaries, except that by effecting the in- 
crease through the medium of the pension it re- 
lieved its beneficiaries from the burden of in- 
vesting the salary increase, a burden which as a 
class they are relatively unfitted to bear. Nor 
do we find in President Pritchett's report any 
convincing evidence that the existing pension 
system is based on a defective social philosophy, 
or that if continued it will not realize its pur- 
pose, or that it ought to be abandoned for any 
reason except inability to provide adequate 
funds for its maintenance. 

If financial exigencies necessitate a modifica- 
tion of the existing plan so as to require coopera- 
tion and voluntary contribution to it by teachers, 
in order to ensure the continuance of its benefits, 
then we are of the opinion that the contribution 
by the foundation should be so substantial that 
such benefits would not lose their present char- 
acter as a means for improving the status of the 
profession by sensibly increasing the rewards 
that it offers; and that, so far as possible, the 



196 CAENEGIE 

original aim and purpose of the foundation 
should be adhered to. 

II 

A suggestion made in President Pritchett's 
report which immediately concerns all of the 
teachers in accepted institutions is the proposal 
that teachers under 45 years of age should not 
be included in the benefits of the existing pen- 
sion system. That the trustees of the founda- 
tion clearly recognize that the foundation is 
under moral obligation to the teachers in ac- 
cepted institutions appears from their resolu- 
tion of November 17, 1915, "That whatever plan 
is finally adopted will be devised with scrupulous 
regard to the privileges and expectations which 
have been created under existing rules" (page 
VIII). It becomes important at the outset, 
therefore, to inquire whether the proposed cur- 
tailing of those privileges and expectations is 
necessitated by financial inability to meet them, 
and if not, whether there is any moral justifica- 
tion for the discrimination against teachers in 
accepted institutions under 45 years of age. "We 
were encouraged to believe that such necessity 
did not exist by the statement (page 81) : 

Mr. Carnegie has placed behind the institution he has 
founded [The Carnegie Foundation] a great corporation 
[The Carnegie Corporation] with an income far beyond 
the load which would be imposed by the present pension 
system. 



PENSIONS 197 

In order, however, that a clear understanding 
might be reached on this point this committee, 
through its chairman, made inquiry of President 
Pritchett whether such necessity did in fact ex- 
ist. To this inquiry President Pritchett has re- 
plied, suggesting a gradual increase in the age 
of retirement from 65 to 68, and saying: 

With this change in the rules the trustees may then 
fairly ask the Carnegie Corporation for its support in 
inaugurating the new system, and in maintaining the old 
one for all teachers now in the associated colleges, leav- 
ing to every teacher the option as to whether he would 
remain in the old system or enter the new. 

(Copies of the correspondence with President 
Pritchett are printed in an appendix.) While 
this does not answer definitely the inquiry 
whether there is financial -necessity for exclu- 
ding any teacher in an accepted institution, what- 
ever his period of service, from the benefits of 
the existing system, we interpret President Prit- 
chett 's answer as an assurance that there are 
sufficient funds available, through the aid which 
the Carnegie Corporation may extend to the 
Carnegie Foundation, to meet the expectations 
of all teachers in accepted institutions, regard- 
less of age, if such expectations are deemed to 
rest on a moral obligation of the Carnegie Foun- 
dation. If it should be found that the financial 
resources of the foundation and the funds which 
may be availed of by it are insufficient for this 
purpose, then, of the various suggestions which 



198 CABNEGIE 

have been made for reducing the benefits of the 
existing system, we regard a gradual change in 
the minimum age of retirement as perhaps least 
objectionable. 2 

That, however, such moral obligation exists is 
not, in our opinion, open to serious debate. It 
is the common observation of every man of ex- 
perience in the teaching profession that the ex- 
pectation of a retiring allowance is an important 
factor with many a teacher, not only in the 
choice of the profession, but, in many instances, 
in his choice of the institution in which he will 
practise that profession. 

There are few men in administrative positions 
in our colleges and universities who can not re- 
call cases of young men who have given up more 
lucrative professions to adopt the calling of the 
teacher, and have been influenced in doing so, 
in part at least, by the expectation that they 
would be entitled to the retiring allowance. 

In the first annual report of the foundation it 
was stated (page 37) that one of the principal 
ends to be realized by the pension system was 
the attraction of strong men into the teaching 
profession. In the report for 1912 (page 86) 
it was stated that the pension system "will have 

2 This statement does not imply an approval of such 
a step, by the members of this committee, or the en- 
dorsement of any policy looking to an advance in the 
minimum age of retirement. Such proposal is not made 
in the comprehensive plan and is open to serious objec- 
tions. 



PENSIONS 199 

its influence in inducing men to remain perma- 
nently in the teaching prof ession, ' ' and in the 
present report, President Pritchett comments on 
the fact (page 34 and page 54) that the prospect 
of a pension is held out as an inducement to 
teachers to accept positions in associated insti- 
tutions, and properly so, we may add, since, as 
we have already pointed out, the original concep- 
tion of the pension system was that it was a form 
of additional compensation to the teacher. 

Moreover, it is undoubtedly a fact that many 
teachers under 45 years of age have already 
made provision for life insurance of such char- 
acter that it would be impossible for them to 
transfer to any other system without financial 
loss ; while others, in expectation of the promised 
pensions, have failed to make provision for their 
old age, and can now make such provision, if at 
all, only by serious financial sacrifice. As Presi- 
dent Pritchett points out in his report, "The 
man of 30 who looks forward over an interval of 
35 years " to the acceptance of a pension "will 
pay for it in one way or another before he re- 
ceives it." If pensions are wages, or if an in- 
structor "at $1,500 a year who is offered $1,800 
to go to another college is induced to remain 
where he is under the expectation of a pension 
30 years later, not realizing that the difference 
in salary will pay for the pension several times 
over," then teachers in accepted institutions 
have been paying for their prospective pensions, 



200 CAENEGIE 

of which it is now proposed they shall be de- 
prived. 

But the question of moral right is not one af- 
fecting individuals alone ; it affects the accepted 
institutions. All of them have consciously 
shaped their policy in relation to employment, 
compensation and retirement of teachers with 
definite reference to the pension system of the 
Carnegie Foundation. A number of them have 
abandoned or modified established pension sys- 
tems of their own, as in the case of Columbia, 
Harvard and Yale, in reliance upon the pension 
system of the Carnegie Foundation which they 
have substituted for them. Others, in response 
to a definite offer of the foundation to place them 
on its accepted list if they would comply with 
certain stipulated conditions, have made changes 
in their constitutions and in their denomina- 
tional relations. Yet others, in return for the 
extension of the benefits of the pension system 
to them, undertook to provide retiring allow- 
ances for their teachers not eligible to the ben- 
efits of the Carnegie Foundation, and are now 
under moral, if not legal, obligations to make 
provision for the continuance of those benefits. 

Thus it seems clear that the Carnegie Foun- 
dation is under moral obligations, not only to in- 
dividuals, but to the institutions themselves, not 
to deprive teachers in the accepted institutions 
of their present expectancy of a pension. There 
is no middle ground for the compromise of moral 



PENSIONS 201 

obligations. We are therefore of the opinion 
that the Carnegie Foundation should not assume 
any new function until its present obligations 
both moral and legal are examined with preci- 
sion, and provision made explicitly for meeting 
those obligations, and we believe that the foun- 
dation is under the strongest moral obligation to 
include within the benefits of its existing pen- 
sion system all teachers in accepted institutions, 
regardless of their age, to whom its present reg- 
ulations were applicable in the academic year 
1915-16. 

Ill 

With reference to the proposed "Comprehen- 
sive Plan of Insurance and Annuities" we would 
say at the outset that we consider that the ex- 
isting pension system of the Carnegie Founda- 
tion might properly be supplemented by some 
system of mutual insurance, with special provi- 
sion for disability and for teachers who are not 
of sound qualifications — that is of sub-standard 
physical qualifications — and for widow's allow- 
ances, the benefit of which system might well be 
extended to instructors in institutions not on the 
accepted list of the foundation. Such a system 
should be mutual in character, so conducted that 
the beneficiaries of the plan would control its 
management and be entitled to participate in 
any surplus accumulation of insurance funds, 
and it should offer to all participants a definite 



202 CAENEGIE 

contract. The existing pension system does not 
offer adequate protection against the risk of dis- 
ability and it offers no protection for the risk of 
death before the completion of 25 years of service. 

We believe that the foundation could render a 
highly useful service to college and university 
teachers by the use of its organization in the col- 
lection of data and in assisting, in conjunction 
with representatives of the teaching profession, 
in the organization of such a plan of insurance, 
the cost of which should be defrayed from pre- 
miums paid by the insured. The members of the 
teaching profession undoubtedly constitute a 
group having common aims and experience such 
as make entirely feasible and desirable the es- 
tablishment of such a plan of insurance. But we 
find ourselves unable at this time to approve of 
the proposed comprehensive plan of insurance 
and annuities, both because it is proposed as a 
substitute for a plan which we believe should not 
be abandoned in principle — because it does not 
itself contribute to the advancement of teach- 
ing — and also because we are not satisfied that 
the proposed plan is not open to serious objec- 
tions, which should be subjected to systematic 
study and to the scrutiny of experts before it is 
finally adopted. 

The past experience of the foundation and its 
present financial embarrassment should serve as 
a warning of the perils involved in the laying 
out and putting into operation of an insurance 



PENSIONS 203 

plan for the payment of pensions and annuities 
extending over an indefinite period into the 
future and lacking in its statement many of the 
details on which must necessarily depend its suc- 
cess or failure. The members of this committee 
have acquired from their recent experience a 
lively sense of the concern, not to say mental dis- 
tress and financial loss, which may result from 
the failure or abandonment of such a plan after 
the great body of teachers have come to rely 
upon its protection. 

We believe, therefore, that before the adoption 
of the proposed plan, or any plan which under- 
takes the establishment of a scheme of life and 
disability insurance and the payment of annu- 
ities to college teachers, additional data and de- 
tailed information should be available for study 
and criticism. No doubt such data have been 
gathered and considered by the foundation, but 
before an invitation is accepted to participate in 
a plan involving the ultimate investment of a 
large sum of money by members of the teaching 
profession, and affecting vitally the future of 
college and university teachers throughout the 
country, we believe that a specific statement 
should be prepared and submitted by the foun- 
dation showing its liabilities, accrued and pros- 
pective, under the existing plan, whether moral 
or legal. It will then be possible to ascertain 
definitely what financial resources are available, 
and therefore whether they are sufficient to en- 



204 CARNEGIE 

sure the success of the proposed plan of insur- 
ance and annuities or of any other plan which 
may be adopted involving participation by the 
Carnegie Foundation. 

There should also be prepared and submitted 
a statement showing the prospective progress 
and details of operation of the proposed plan for 
insurance and annuities, as estimated in advance 
during a term of years, presumably at least for 
two generations. For this purpose the founda- 
tion should prepare and present a schedule 
showing the estimated operations of the insur- 
ance company and the savings or annuity fund. 
It should show the number of lives, classified as 
to age, that are expected to participate in the 
plan at the present time, with the estimated in- 
crease in membership from year to year. It 
should show the income in the way of premiums, 
the expected or estimated contributions of va- 
rious institutions and colleges, the interest in- 
come, the expected death claims, the expense, 
and the annual amount which must be reserved 
to meet the reserve requirements of the New 
York insurance law. Such statement when pre- 
pared should be submitted to a committee or 
committees of representative teachers and of 
representatives of some recognized organization 
of actuaries, such as for example the Actuarial 
Society of America. 

Then and only then will it be possible, we be- 
lieve, to form an intelligent judgment as to the 



PENSIONS 205 

probable financial success of the plan and as to 
the real service which it is capable of rendering 
to the teaching profession. In order that ade- 
quate opportunity may be had for such study of 
the problem and the formation of such judg- 
ment, we are of the opinion that a period of at 
least one year is necessary, and we respectfully 
suggest that formal action with respect to this 
or any other plan of insurance and annuities for 
college teachers should be postponed at least one 
year from the date of the meeting of the trus- 
tees of the foundation to be held on the 15th 
of November, 1916. 

It also seems to the committee desirable, and 
it therefore requests, that opportunity be given 
to representatives of the American Association 
of University Professors to be present and to be 
heard at that meeting of the trustees. And in 
view of the importance of the subject and its far- 
reaching consequences to all university teach- 
ers in America, we venture to express the hope 
that no plan of insurance or annuities for uni- 
versity teachers will be adopted by the founda- 
tion without further consultation with the as- 
sociation. 

We believe also that the consideration of this 
and other problems affecting the interests of 
university teachers would be facilitated and 
greater cooperation insured if the policy were 
adopted of electing university teachers to the 
Board of Trustees of the Carnegie Foundation 
from time to time as opportunity presents. 

14 



206 CAENEGIE 

We think that a consideration of the details 
of the proposed plan at this time is of minor im- 
portance. Nevertheless it is desirable that we 
should direct attention to some of the numerous 
criticisms of it which appear to us to raise ques- 
tions which, so far as can be gathered from Presi- 
dent Pritchett's report, have not received ade- 
quate consideration. With respect to a number 
of these the committee expresses no opinion, for 
it has had neither the time nor the resources to 
enable it to make any thorough investigation of 
them. But if sufficient opportunity is afforded 
for the study of the details of the proposed plan 
of insurance and annuities, as we have already 
suggested, then we believe these criticisms should 
receive careful consideration. Among them may 
be mentioned the following : 

(a) The proposed plan for insurance and an- 
nuities does not provide with sufficient definite- 
ness for a plan of mutual participation, whereby 
the participants in the plan shall share in its 
management and in the accumulated surplus. 

(6) The proposed disability benefit limits 
the payment of the benefit to professors who 
have been in service 15 years or more. In our 
opinion disability ought to be defined as disabil- 
ity from carrying on university service for any 
time during the period of service, and adequate 
provision made to insure against disability as 
thus defined. The consequences of the teacher's 
disability are usually much more serious during 



PENSIONS 207 

the earlier years of the period of service than in 
the later years. 

(c) The difficulties of establishing a plan of 
insurance which would be compulsory for all 
participants have not received sufficient consid- 
eration. We are of the opinion that the compul- 
sory feature of the plan is open to serious objec- 
tion, and that it is doubtful whether it can be 
carried into practical operation. Among the ob- 
jections which may be briefly enumerated are — 
that it restricts unduly the freedom of the indi- 
vidual teacher; that state universities and col- 
leges would find themselves legally incompetent 
to contribute to a scheme for the benefit of 
teachers, and that an attempt to render them 
competent to do so through process of legislation 
would involve the entire vexed question of in- 
surance for state employees; that the tendency 
would be to take from the teacher's salary the 
share contributed by the college toward his in- 
surance by deferring increases of salary; that 
teachers already carrying commercial insurance 
would be unwilling to give up such insurance; 
or to continue it with the added burden of com- 
pulsory insurance; and that many of those who 
have heretofore not taken commercial insurance 
would probably have valid reasons for declining 
to participate. 

(d) The plan does not sufficiently disclose 
whether participants in it are to be subjected 
to a medical examination, and, if such examina- 



208 CABNEGIE 

tions are to be made, it does not make adequate 
provision for those who are sub-standard risks. 
If no medical examination is to be required, it 
does not appear whether there are sufficient data 
available on which to base an estimate of the cost 
of this class of group insurance for long periods. 
In the absence of such data the acceptance of 
such risks would imperil the success of the plan. 
(e) It has been urged by some that a plan 
for insurance of teachers could be devised and 
carried into effect with established insurance 
companies, eliminating agents' commissions, at a 
cost not substantially greater than the cost of in- 
surance under the plan proposed, but with the 
added benefit of the experience, stability and es- 
tablished organization of the better commercial 
insurance companies. "Without expressing any 
final opinion upon this contention, we may say 
that it is not clear from President Pritchett's 
report what saving in cost of insurance is effected 
over the cost of insurance on a similar plan 
which might be effected with the commercial 
companies. Such information as we have been 
able to gather indicates that the difference in 
cost would be very slight, and that by carrying 
into effect the proposed plan the Carnegie Foun- 
dation would substitute for its former activities 
a venture into a field new to it, not free from 
business hazards, but long and successfully oc- 
cupied by others, without any definite expecta- 
tion of substantial financial advantage. 



PENSIONS 209 

(/) The proposed plan does not make clear 
that there is any definite separation of the in- 
surance from the annuity plan, and is in any 
case too rigid, and does not offer sufficient variety 
of types of insurance to be adaptable to the needs 
of university professors. 

(g) Adequate consideration has not been 
given to the possibility of combining with the 
proposed savings fund a provision for decreas- 
ing term insurance so that as the savings fund 
increases the amount of insurance may decrease 
with consequent saving of its cost. 

(h) No definite provision is made for the pay- 
ment of dividends or other disposition of surplus 
accumulation under the proposed plan. 

(i) Sufficient consideration has not been given 
to the position of one who withdraws from the 
teaching profession and wishes to continue his 
insurance upon a proper basis. 

(j) No consideration has apparently been 
given to the relative age of professors and their 
wives and to its effect on the cost of the annuity. 3 
(k) No provision is made for enabling those 
who already have insurance to avail themselves 
advantageously of the benefits of the proposed 
plan. 

The unfortunate financial history of the foun- 

3 This objection has apparently been met in the non- 
confidential copy of President Pritchett's report which, 
however, was not in the hands of the committee at the 
time of preparing this report. 



210 CAENEGIE 

dation, the suggested change in its fundamental 
purpose under the guise of a change of rules re- 
lating to its administration, the defects and omis- 
sions in the proposed Comprehensive Plan of 
Insurance and the unconvincing character of 
the reasons which are urged for the change, have 
resulted in a loss of confidence in the foundation 
on the part of American university teachers. 
No man enjoying a wide acquaintance with mem- 
bers of the profession can have any doubt of this 
fact. If evidence of it were needed, it may be 
found in the reports of various committees of 
university faculties, appointed to consider the 
Comprehensive Plan of Insurance and Annu- 
ities, such as, for example, the reports of Cor- 
nell, Harvard, Princeton, Stanford University, 
the University of Wisconsin and Johns Hopkins 
University. Such lack of confidence must in- 
evitably impair the usefulness of the foundation, 
and make it difficult, if not impossible, to solve 
satisfactorily the problems which are pressing 
for solution. We deem it of the highest impor- 
tance that every effort should be made on the 
part of those interested in the promotion of the 
purposes of the foundation to repair that loss. 
For the full realization of this end four things 
seem to us chiefly requisite. The first is the pub- 
lication by the foundation of a definite assurance 
that it will completely fulfil any expectations 
held out to teachers in the associated institutions 
by the present rules. The second is a strict ad- 



PENSIONS 211 

herence to the fundamental principles and pur- 
poses indicated by Mr. Carnegie in his letter of 
gift and repeatedly enunciated in the early pub- 
lic declarations of the foundation, on the basis 
of which the existing system was established. 
The third is the encouragement of a more active 
and direct participation of the teaching profes- 
sion in the management of the foundation and in 
the consideration of questions which gravely 
affect the future of the profession and of the 
American universities and colleges. Finally it 
seems to us essential, if the foundation is to en- 
joy the confidence of the academic profession 
and attain its highest usefulness, that it should 
be recognized that for it, even more than for 
other institutions, definiteness and steadiness of 
purpose and stability of policy are indispensable. 
It is our earnest hope that the future work of 
the foundation with its potency for notable serv- 
ice to American education may be firmly based 
upon these principles. 
The committee : 

Thomas S. Adams, Yale University. 
Francis H. Bohlen, 

University of Pennsylvania. 
Walter W. Cook, Yale University. 
F. S. Deibler, Northwestern University. 
Frank H. Dixon, Dartmouth College. 
Thomas C. Esty, Amherst College. 
W. F. Gephart, Washington University. 
John H. Gray, University of Minnesota. 



212 CABNEGIE 

Henry B. Gardner, Brown University. 
M. W. Haskell, University of California. 
Otto Heller, Washington University. 
Jacob H. Hollander, 

Johns Hopkins University. 
S. S. Huebner, University of Pennsylvania. 
Joseph Jastrow, University of Wisconsin. 
E. W. Kemmerer, Princeton University. 
Alfred C. Lane, Tufts College. 
Arthur 0. Lovejoy, 

Johns Hopkins University. 
H. A. Millis, University of Chicago. 
Carl C. Plehn, University of California. 
H. L. Kietz, University of Illinois. 
Ashley H. Thorndike, Columbia University. 
Henry S. White, Vassar College. 
W. F. Willcox, Cornell University. 
Harlan F. Stone, Chairman, 

Columbia University. 



SECOND REPORT OF THE COMMITTEE ON 

PENSIONS AND INSURANCE OF THE 

AMERICAN ASSOCIATION OF 

UNIVERSITY PROFESSORS* 

In the report of this committee, submitted at 
the annual meeting of the Association in Chi- 
cago on December 28, 1917, the committee dis- 
cussed at length the plans of insurance prepared 
by the joint commission appointed at the re- 
quest of the Carnegie Foundation to consider 
the various suggestions for a plan of insurance 
for college teachers, and at the conclusion of the 
report the committee formulated its views and 
recommendations as follows: 

1. We believe that the plan of insurance as proposed 
by the commission, if actuarially sound, is well adapted 
in its general features to meet the needs of teachers in 
American universities and colleges, although we believe 
experience will indicate that the plan should be modified 
in some particulars. 

2. We recommend that this association do not appoint 
representatives to participate in the organization of the 
proposed insurance company until there is substantial 
compliance with the conditions hereinafter enumerated. 

3. We recommend that the American Association of 
University Professors express its approval of the plan 

i Printed in School and Society, March 8, 1919. This 
report was presented, and unanimously approved, at the 
annual meeting of the association, held at Baltimore on 
Saturday, December 28, 1918. 

213 



/ 



214 CABNEGIE 

and cooperate in launching it, when the following condi- 
tions have been satisfied: 

(a) That before taking any steps toward the organi- 
zation of the proposed insurance company and before the 
diversion of any funds available to the Carnegie Foun- 
dation, to the purposes of the proposed insurance com- 
pany, the present obligations of the foundation, both 
legal and moral, be examined and determined, so far as 
is practicable, with precision and definite and binding 
assurances be given by the Carnegie Foundation or some 
other responsible body that provision will be made for 
meeting those obligations to the extent of the financial 
resources of the Carnegie Foundation and of any funds 
available to it. 

(b) That the proposed plan of insurance together with 
a comprehensive statement of its prospective operation 
be submitted to an independent body of actuaries for 
study, and its criticism and suggestions invited. 

(c) That the proposed plan of insurance be so modi- 
fied that in the organization of the proposed insurance 
company suitable provision be made whereby within a 
reasonable time, if not immediately, the power to elect 
the company's trustees or directors shall be vested in 
the policy-holders, in proportion to their contribution to 
the financial resources of the insurance company, and 
that they shall have authority to vote in person, or by 
proxy, at all meetings for the election of directors. 

The committee reserves the privilege of bringing to 
the attention of the association other matters germane 
to this subject or supplementing the foregoing recom- 
mendations when such action seems desirable. 

These recommendations were approved by vote of the 
association and it was further voted "that when in the 
judgment of the Committee P, concurred in by the 
Executive Committee, the plans of insurance of the Car- 
negie Foundation conform to the spirit of the recom- 
mendations in this report, the Executive Committee be 



PENSIONS 215 

authorized to take such steps as may be necessary for 
cooperation in carrying out these plans. M 

During the past year this committee has car- 
ried on an extensive correspondence with its own 
members and with members of the teaching pro- 
fession, and it has sought through personal in- 
terviews and correspondence with President 
Pritchett of the Carnegie Foundation to com- 
municate to the foundation in detail, the views 
of the committee which have been summarized 
in previous reports, and it has endeavored to 
secure some real cooperation between the foun- 
dation and this committee in formulating plans 
for the protection of the interests of those en- 
titled to the benefit of the existing pension plan 
and for the establishment of the proposed scheme 
of insurance, which would meet the expressed 
views of the association and which would com- 
mend themselves generally to members of the 
teaching profession. 

The committee presents its report in two parts 
relating, respectively, to the plans for the future 
of the existing pension plan, and to the new 
plan for teachers' insurance and annuities. In 
each case, it first records the recent action of the 
foundation and its dealings with the committee, 
and then appends the committee 's comments and 
recommendations : 



216 CAENEGIE 

1. FUTURE OF EXISTING PENSION SYSTEM 
A. RECORD OF ACTION TAKEN 

In April, 1918, the trustees of the foundation 
adopted and made public a statement in which 
was announced the future policy of the founda- 
tion with respect to administering the existing 
pension scheme. This statement (copies of 
which may be procured from the Carnegie Foun- 
dation) so far as now relevant, may briefly be 
summarized as follows : 

(a) It announced the accumulation of a re- 
serve fund for the liquidation of pension obliga- 
tions, to be paid into the treasury of the founda- 
tion by the Carnegie Corporation. This fund is 
to be made up of five million dollars, to be paid 
into the treasury of the foundation as of Janu- 
ary 1, 1918, and further additions thereto which 
are to be made at the rate of $600,000 annually 
for a period of ten years, making a total reserve 
to be paid by the corporation aggregating eleven 
million dollars without including accumulations 
of interest on the capital of the reserve fund. 

(b) It was announced that pensions would 
not be paid to teachers appointed to positions 
in associated institutions after November 17, 
1915. A resolution to this effect was adopted by 
the trustees of the foundation on May 18, 1917. 

(c) It was announced that the plan of retire- 
ment with maximum pension allowances at age 
65 would be continued until June 30, 1923. 



PENSIONS 217 

After that date the age of retirement with the 
maximum allowance will be advanced until June 
30, 1928, after which date the maximum age of 
retirement with the maximum allowance will be 
seventy years. The increase of age of retirement 
was indicated as follows: 

Between July 1, 1923, and June 30, 1925, maximum 
allowance at 66. 

Between July 1, 1925, and June 30, 1926, maximum 
allowance at 67. 

Between July 1, 1926, and June 30, 1927, maximum 
allowance at 68. 

Between July 1, 1927, and June 30, 1928, maximum 
allowance at 69. 

It was also announced that as an alternative 
the teacher is to be given the option of retiring 
on reaching age sixty-five, with a diminishing 
pension allowance, the actual allowance being 
the maximum allowance diminished at the rate 
of one fifteenth for each year by which the age 
at which the maximum allowance is available is 
anticipated. 

For those reaching age sixty-five after June 
30, 1923, who are unmarried the allowance is to 
be reduced to 66f per cent, (to 85 per cent, if 
the salary is $1,800 or less). 

The reason given for these sweeping reduc- 
tions of the benefits of the existing pension sys- 
tem was that actuarial computations prepared 
for the foundation indicate that the resources of 
the foundation, including the reserve fund ere- 



218 CAENEGIE 

ated through the generosity of the Carnegie 
Corporation already referred to, will not be suf- 
ficient to maintain the pension plan on the pres- 
ent basis for those who are appointed to asso- 
ciated institutions before November 17, 1915, 
without a substantial diminution in the rate of 
expenditure. 

2. The following resolutions were adopted by 
this committee at a meeting held June 17, 1918, 
in New York City, and were thereafter trans- 
mitted to the trustees of the Carnegie Foun- 
dation : 

Voted, that : the plan embodied in President Pritchett *s 
public statement of April, 1918, and subsequently adopted 
by the trustees of the Carnegie Foundation without pre- 
vious consultation with this committee or any other rep- 
resentative body of university teachers, does not conform 
to the spirit of the recommendations contained in the 
second report of this committee of January, 1918. We 
therefore offer the following suggestions for the amend- 
ment of the plan: 

(a) That, in view of the repeated declarations of the 
trustees, it is manifestly implied that the entire eleven 
million dollars recently granted by the corporation, to- 
gether with its increment and with the interest on the 
original capital of the foundation, is to be devoted ex- 
clusively to the payment of pensions, with a view to 
realizing, as nearly as these resources permit, the rea- 
sonable expectations of teachers in accepted institutions, 
upon the basis of the rules in force on November 17, 
1915. The committee accordingly requests the trustees 
of the foundation to publish a formal declaration to this 
effect. 

(ft) That, inasmuch as it is clearly impossible at the 



PENSIONS 219 

present time to determine with even approximate pre- 
cision what scale of pensions these resources will permit 
the foundation to pay, the committee protests against 
the adoption at this time of any permanent scale, and 
especially against that proposed in President Pritehett's 
communication of April, 1918, which there is reason to 
believe to be less liberal than the above mentioned re- 
sources will make possible. The scheme of pensions set 
forth in that communication should, however, be made 
public as an indication of the minimum benefits which 
younger teachers in the accepted institutions may, an 
the least favorable circumstances, expect. It is also de- 
sirable that the actuarial computations and the data on 
which they are based be made accessible to representa- 
tives of the teaching profession. 

(c) That, in view of the special hardship of sudden 
changes in the rules affecting men near the age of retire- 
ment, the provision relating to men between 60 and 65, 
in President Pritchett's statement of April, 1918, should 
be observed by the foundation. 

(d) That, at the end of five years from the present 
date, the foundation should in the light of its experience 
up to that time, and upon the basis of further actuarial 
studies, take up with a committee of this association the 
question of the framing of new rules, in accordance with 
the principle mentioned under (a), should at that time 
determine what pensions, approximating as nearly as 
possible to the 1915 rules, its resources will enable it to 
pay. Decision as to the least objectionable modifications 
of those rules should be reached only after consultation 
with representatives of the university teaching profes- 
sion, i. e. y with a committee of this association and pos- 
sibly with other bodies. 

(e) That, any new scale of pensions, to be adopted in 
1923, as provided in the preceding paragraph, shall not 
apply detrimentally to teachers who, on June 30, 1923, 
are between the ages of 60 and 65. 



220 CAENEGIE 

(/) That, the retroactive provision, whereby teachers 
entering the service of accepted institutions between 
November 17, 1915, and the date of the actual annul- 
ment of the old rule by the foundation are excluded from 
the benefits of the existing pension system, is not in ac- 
cord with the declaration of the trustees "that whatever 
plan is finally adopted will be devised with scrupulous 
regard to the privileges and expectations which have 
been created under existing rules," and should be re- 
pealed. 

It was further voted, "that the foundation be re- 
quested to encourage the governing bodies of the several 
associated institutions to adopt a plan whereby the 
younger teachers now entitled to the benefits of the ex- 
isting pension plan be enabled to retire at sixty-five 
rather than at seventy." 

3. At the annual meeting of the board of trus- 
tees of the Carnegie Foundation, November, 
1918, the following minute was adopted, and was 
on November 21, transmitted to this Committee. 

The board of trustees acknowledges the receipt of the 
suggestions and recommendations contained in the reso- 
lutions adopted by the Committee on Pensions and In- 
surance of the American Association of University Pro- 
fessors at its meeting of June 17, 1918. The trustees of 
the foundation have sought to comply as fully with the 
suggestions of the committee as the fixed amount now 
available for these retiring allowances will enable them 
to do. In response to these resolutions the trustees au- 
thorize the following additional statements which would 
seem to make clear the purposes of the trustees: 

(a) The reserve created by the aid of the Carnegie 
Corporation and the subsequent additions to it and all 
interest accumulations thereon can be used under the 
arrangement with the Carnegie Corporation only for the 



PENSIONS 221 

payment of the retiring allowances to teachers in the 
associated colleges and universities. 

(6) The adjustment explained in the statement to 
teachers of the associated Institutions in the circular of 
the foundation dated April 22, 1918, stated that the 
scale adopted was based upon exhaustive actuarial ex- 
aminations, but that the experience of the future might 
show a situation that would make possible a more liberal 
scale than that based upon these actuarial computations. 
In the event that such a reduction in the expected load is 
realized it is the intention of the trustees to make as 
liberal provision for the payment of pensions as the 
funds will permit. 

(c) The income of the endowment of the foundation 
is now being expended in accordance with the directions 
of the founder "to provide retiring pensions for the 
teachers of universities, colleges and technical schools in 
our country, Canada and Newfoundland under such con- 
ditions as you (the trustees) may adopt from time to 
time." But it was further provided by the founder 
that "by a two third vote they (the trustees) may from 
time to time apply the revenue in a different manner and 
for a different though similar purpose to that specified, 
should coming days bring such changes as to render this 
necessary in their judgment to produce the best results 
possible for the teachers and for education. ,? It is, of 
course, not possible for trustees to bind their successors 
with respect to either of these conditions. It is under- 
stood that the expense of educational studies is met from 
a special endowment not available for pensions. 

(d) The actuarial computations upon which the action 
of the trustees has been based are at the disposition of 
the committee for any examination they may desire to 
make. 

B. COMMENTS OF THE COMMITTEE 

The net result of these negotiations, and of the 
eventual action of the foundation with respect 

15 



222 CAENEGIE 

to the existing pension system, may be briefly 
summarized as follows : 

(a) Through the generosity of the Carnegie 
Corporation eleven million dollars has been 
added to the funds of the foundation for the pur- 
pose of enabling it to fulfil, to a greater extent 
than its previous resources made possible, the ex- 
pectations of retiring allowances justified by the 
published rules and announcements of the foun- 
dation. 

(6) Certain additional assurances have been 
given that this fund will be used for the payment 
of pensions. It is to be observed, however, that 
the above-noted resolution (a) of the trustees of 
the foundation, to the effect that the reserve cre- 
ated by the corporation's gift "can be used un- 
der the arrangement with the corporation only 
for the payment of retiring allowances to teach- 
ers in the associated colleges and universities," 
is in express conflict with the terms of the agree- 
ment between the corporation and the founda- 
tion. As published in "A Statement to the 
Teachers in the Associated Colleges and Univer- 
sities' ' (April 5, 1918), that agreement provides 
(p. 7) that if "the reserve should prove greater 
than is demanded for this purpose (the payment 
of pensions) , the remainder shall be added to the 
permanent endowment of the foundation to be 
used for its corporate purposes.' It was to in- 
sure the use of the entire reserve fund for the 
payment of retiring allowances instead of the 



TENSIONS 223 

ultimate addition of a substantial portion of it 
to the endowment of the Carnegie Foundation 
that the committee urged the trustees to adopt 
a definite program for revision of the scale of re- 
tiring allowances at the expiration of a fixed 
period and in the light of actual experience, a 
suggestion which for reasons not disclosed the 
trustees have declined to accept. 

It is further to be observed that, even by the 
terms of the resolution of November, 1918, there 
is assurance that the funds of the foundation 
will be used for the payment of pensions only 
so long as the present agreement between the 
foundation and the corporation remains unmod- 
ified. That agreement, however, can apparently 
be modified at any time by the consent of the 
two boards, which consist in great part of the 
same persons. 

In their formal statement the trustees give no 
assurance that the income from the endowment 
of the foundation will be used for the payment 
of pensions; and the published rules can be 
varied or abandoned, at any time without the 
violation of any legal obligation, or of any moral 
obligation differing in nature from those which 
the foundation has, in several previous instances, 
indicated that it does not regard as binding. 

(c) In disregard both of the vote unanimously 
adopted by the joint commission (of which the 
president of the foundation and five of its trus- 
tees were members), and published in its report 



224 CAENEGIE 

of April 27, 1917 (p. 8), in disregard also of the 
above-cited resolutions of this committee, the 
board of trustees has declined to modify its ac- 
tion whereby teachers entering the service of the 
accepted institutions since November, 1915, will 
be deprived of pensions to which they were en- 
titled under rules not abrogated until 1917. 
There is no reason to doubt that a number of 
teachers have been influenced to retain positions 
in, or accept calls to, these institutions, during 
this period, by the expectation that they would 
receive the pensions specified by the rules then 
apparently in force. The committee, therefore, 
is compelled (especially in view of the founda- 
tion's now increased resources) to take the view 
that the foundation has disregarded the formally 
announced declaration of its trustees ' ' that what- 
ever plan is finally adopted will be devised with 
scrupulous regard to the privileges and expec- 
tations which have been created under existing 
rules. ' ' 

II. NEW PLAN FOR TEACHERS' ANNUITIES AND 

INSURANCE 

A. RECORD OF ACTION TAKEN 

1. The plan of insurance referred to in our 
last report, with some modifications and addi- 
tional details, has been submitted by President 
Pritchett to a committee of the Actuarial Society 
of America and to a committee of the American 






PENSIONS 225 

Institute of Actuaries for their criticisms and 
suggestions. Both committees have reported in 
substance that the plan as submitted is safe and 
practicable if capably managed. Apparently, 
however, no definite plan for the selection of 
risks was submitted to either of these committees, 
and the reports of both committees urge con- 
servatism in the selection of risks by certifica- 
tion. Both recommend changes in the form of 
policy and both comment at length on the fact 
that the policies provide for a flat premium rate 
without the usual rebate or "dividend" to pol- 
icy-holders which is offered in participating poli- 
cies. Taken together the two reports indicate 
no adequate reason for not issuing the usual 
form of participating policy sold by other insur- 
ance companies organized or doing business un- 
der the laws of New York. (Copies of these 
reports may be obtained from the Carnegie 
Foundation.) 

2. An insurance company has been incor- 
porated under the laws of the State of New York, 
under the name, "Teachers' Insurance and An- 
nuity Association of America. " It is announced 
that the company is to begin business with a 
capital of one million dollars paid into the In- 
surance Company by the Carnegie Corporation 
(not the Carnegie Foundation, as originally pro- 
posed) which owns and holds the entire capital 
stock of five hundred thousand dollars. The 
trustees of the Carnegie Corporation have 



226 CAENEGIE 

adopted the following resolution with respect to 
the control of the insurance company : 

Voted, That it is the intention of the Carnegie Cor- 
poration whenever a group of policy-holders has been se- 
cured sufficiently large to be representative of the col- 
lege and university teachers of the United States and 
Canada, in conference with the interested parties to pro- 
vide machinery by which the policy-holders, through rep- 
resentatives selected by them, shall participate in the 
election of the trustees who manage the association. 

As at present constituted, however, the insur- 
ance and annuity association is controlled by a 
board of sixteen trustees chosen by the Carnegie 
Corporation as provided by the by-laws of the 
insurance association. Six trustees constitute a 
quorum for the transaction of business. Its pres- 
ident is Henry S. Pritchett, who is also president 
of the Carnegie Foundation ; its secretary is the 
secretary of the foundation ; the treasurer is the 
treasurer of the foundation; and the chairman 
of the board is a member of the foundation's 
board of trustees. Of the trustees of the insur- 
ance company, eight are or recently have been 
trustees or employees of the Carnegie Founda- 
tion ; the same is true of four of the six members 
of the executive committee. Three members of 
this committee constitute a quorum and the com- 
mittee is given all the powers, of the board of 
directors, in the intervals between the meetings 
of the board. There are two professorial repre- 
sentatives on the board of trustees: Professor 



PENSIONS 227 

Michael M. McKenzie, of the University of To- 
ronto, and Dean F. W. Nicholson, of Wesleyan 
University, formerly a trustee of the foundation. 
There are no professorial representatives on 
either the executive committee or the finance 
committee. 

It should be added that two members of your 
committee were, as individuals, offered appoint- 
ments to the board of trustees of the insurance 
company by President Pritchett, who at that 
time proposed to have three teachers elected to 
the board of trustees. It seemed clear to both 
members that they could not with propriety ac- 
cept such appointment, while the question of 
approving the new corporation's plan was pend- 
ing before the committee, and before the com- 
mittee's report had been submitted to the asso- 
ciation. The committee was given no informa- 
tion with respect to the personnel of the officers 
and trustees of the insurance company or of the 
provision of the charter and by-laws until the 
company was organized, its trustees and officers 
selected and the details of the organization pub- 
licly announced. 

There has lately been published by the Teach- 
ers' Annuity and Insurance Corporation of 
America a Handbook of Life Insurance and An- 
nuity Policies for Teachers, which is a brief pro- 
spectus of the newly formed insurance company, 
giving details of the policies which it proposes 
to write and stating the premium rate. This 



228 CARNEGIE 

booklet either has been, or will shortly be, dis- 
tributed to college and university teachers. It is 
therefore unnecessary to summarize its contents 
in this report. 

B. COMMENTS AND RECOMMENDATIONS OF THE COMMITTEE 
WITH RESPECT TO THE PLAN OF INSURANCE 
AND ANNUITIES 

1. Control of the Company 

Neither the plan for control of the insurance 
company unanimously recommended by the joint 
commission, nor a definite plan for the eventual 
mutualization of the company, proposed by this 
committee, has been adopted. The corporation, 
in the resolution above cited declares only its in- 
tention, at some future time not specified, to 
"provide machinery whereby the policy holders 
through representatives selected by them shall 
participate in the election of the trustees." A 
literal fulfillment of this intention would be 
compatible with a wholly negligible representa- 
tion of the policy-holders or the teaching profes- 
sion on the board of trustees or in the processes 
by which the trustees are to be elected. Mean- 
while, the company is left in a control which, for 
all practical purposes, is identical with that of 
the Carnegie Foundation. We deem it unnec- 
essary to repeat at length those portions of our 
last report 2 in which we direct attention to the 
menace to educational freedom in the United 

2 School and Society, December 2, 1916. 



PENSIONS 229 

States of uniting in the Carnegie Foundation the 
function of critic and mentor of our educational 
institutions with that of distributing financial 
benefits to such institutions and of controlling 
the savings of their teachers. We did not in fact 
at that time contemplate that the insurance com- 
pany was to be brought immediately under the 
control of the foundation. We only pointed out 
that "the exigencies of death and retirement of 
the members of a self-perpetuating board of 
trustees might in a comparatively short time 
place the absolute control of the company in the 
hands of a board and of executive officers who 
were also members of the governing board of the 
foundation or are virtually selected by that 
body. Such an outcome would, in this com- 
mittee's opinion, be sure to create dissatisfaction 
and antagonism on the part of the policy-holders 
and would be prejudicial to the success of the 
undertaking. ' 9 What we contemplated as only 
a possible eventuality turns out to be the basis 
of the organization of the insurance company 
as it is to begin business. 

2. Rates of Premium 

On account of the late date of issue of the 
Handbook of the Teachers' Insurance and An- 
nuity Association, the committee has not been 
able to make an exhaustive examination of all 
the types of policies therein offered, or to at- 
tempt a complete comparison of the rates with 



230 CAENEGIE 

those charged for similar policies by existing 
companies. So far, however, as the committee 
has been able to make such comparisons, it does 
not find that, taken at their face-value, the non- 
participating policies offered by the insurance 
and annuity association are, in point of cost, 
more advantageous to college or university teach- 
ers, than are those offered by a number of well- 
managed participating companies, when allow- 
ance is made for the ' ' dividends ' ' paid by the 
latter. An actuary of one of the largest insur- 
ance companies states, in reply to an inquiry of 
the chairman of the committee : 

So far as concerns participating policies, I have made 
a comparison on the ordinary life plan at three ages, 25, 
35 and 45, with a company which pays as large dividends 
as any other American company. The difference be- 
tween the gross premium charged by that company, less 
the dividend paid for a period of ten years, shows a re- 
sulting cost slightly in excess of the rates charged by the 
teachers' association. If the policy were terminated at 
any time within ten years, it would be more advantage- 
ous to have carried insurance with the teachers' associa- 
tion, but less advantageous after that time because of 
the increase in dividends under the participating policy. 

A similar estimate has been made by President 
Pritchett in a communication to the chairman of 
this committee. If a policy issued by the teach- 
ers' association be compared with a similar pol- 
icy issued by a certain well-known company, the 
premium in the latter, Mr. Pritchett observes, 
"will be much higher." "If however," he 



PENSIONS 231 

.adds, "you carry the company mutual 

rates into the future and assume that earnings on 
the company's investments are going to be on 
the same level as of recent years, you will find 
that at the end of about ten years the net cost of 

the company policy rate thus obtained 

will come down to the level of the corresponding 
rate published in the handbook. In time it may 
fall below the rate there quoted." President 
Pritchett, however, offers reasons, which seem 
to the committee unconvincing, for doubting 
whether the company he names, or other par- 
ticipating companies, will continue to obtain the 
present rate of interest on their investments;. 

Other computations made for the committee 
confirm the conclusion that, except for very 
short term policies, college and university teach- 
ers can probably do as well by taking insurance 
in any one of several existing companies as by 
purchasing the policies of the new association at 
the rates now announced and with the benefits 
thus far promised, if there is no distribution of 
surplus among policy-holders. It should be 
added that the new company offers, in addition 
to the more usual policies, some desirable forms 
of annuity and insurance not at present written 
by most of the older companies which President 
Pritchett believes will be desired by university 
teachers. The committee believes, however, that 
the latter companies would readily write similar 
policies at approximately the same net cost to 



232 CABNEGIE 

the purchaser, if requested to do so by any con- 
siderable number of university teachers. 

The explanation offered by President Pritchett 
in his 12th Annual Report (1917), for the un- 
willingness of the Teachers' Insurance and An- 
nuity Association to offer participating insur- 
ance, as most companies at present do, is the 
statement that, under the laws of the state of 
New York, "dividends" of participating com- 
panies are required to be distributed annually 
and that the annual dividends of the new com- 
pany would for a time be so small as to be less 
than the cost of postage. This explanation seems 
to the committee so inconsequential as to require 
no discussion. 

3. Use of Surplus 

It is true that, as President Pritchett has 
pointed out, the new company may be expected, 
since it pays no dividends, rapidly to accumulate 
a surplus, and that it is in a more favorable posi- 
tion for doing so than ordinary companies. In 
a letter to the chairman of this committee, Mr. 
Pritchett states that "under the provisions of 
the charter such accumulations must be used for 
the benefit of the policy-holders. ' ' The com- 
mittee is, however, upon examination of the 
charter, unable to find in it such a provision. 
The only clause relevant to the matter is that 
which requires the corporation "to conduct its 
business without profit to the corporation or its 



PENSIONS 233 

stockholders. ' f There is in the by-laws a further 
provision that no officers or trustees shall be paid 
salaries in excess of $5,000 per annum, "unless 
such payment shall first be authorized by a vote 
of the board of trustees of the association, ' ' also 
that no pension shall be paid to any officer or 
trustee, or to any member of his family. There 
is in these provisions no assurance that the ac- 
cumulations will be used wholly for paying divi- 
dends to policy-holders or for reducing their pre- 
miums. The charter, indeed, expressly provides 
that the corporation "shall transact business ex- 
clusively on the non-mutual basis and shall issue 
only non-participating policies." Policy-hold- 
ers would have no legal standing to object to the 
amendment or repeal of the provision of the 
charter and by-laws referred to, either by action 
of the Carnegie Corporation, the sole stock- 
holder, or by any purchaser or subsequent owner 
of the stock. There is nothing at the present 
time to prevent the board of trustees from em- 
ploying at their discretion the surplus from the 
savings invested by college and university teach- 
ers in the company — within the limitations set 
by the above-cited clauses and by the laws of 
the state of New York relating to insurance 
companies. 

The committee finds it pertinent at this point 
to recall a sentence from the report unanimously 
adopted by the joint commission in 1917: " The 
man of thirty who participates in a pension plan 



234 CAENEGIE 

under which he expects an annuity thirty-five or 
forty years in the future will take some risk of 
disappointment in accepting any arrangement 
less secure than a contractual one." This re- 
mark has, we believe, been more than once cited 
with approval by President Pritchett ; and it in- 
dicates, in the committee's opinion, the primary 
rule which should guide the action of any teach- 
ers who may be considering dealing with the new 
company. The warning thus incorporated in 
the report of the joint commission gains force 
from any review of the history of the Carnegie 
Foundation. Those responsible for the manage- 
ment of Mr. Carnegie's benefaction have exer- 
cised very freely and frequently the liberty of 
changing their minds and of radically and ab- 
ruptly altering the policy of the foundation. 
Since the new insurance company is under the 
same management, there is no reason to antici- 
pate that its history will not be similar, so far as 
the insurance laws permit. The committee, 
therefore, is strongly of the opinion that any col- 
lege or university teacher will take some risk of 
disappointment in accepting any assurance less 
secure than a contractual one for the employ- 
ment of the accumulated surplus of the new 
company exclusively for the benefit of the policy- 
holders through the payment of dividends or 
reduction of premiums. No such contractual 
guarantee is now offered by the Teachers' In- 
surance and Annuity Association; in fact, it is 



PENSIONS 235 

forbidden by its charter to give such guarantee, 
and the contract actually offered by the associa- 
tion contains the provision: "This policy is is- 
sued on the non-participating plan. It is not 
entitled to participate in the surplus of the asso- 
ciation. ' ' 

Yet it is to be remembered that eventually the 
surplus, if any large number of teachers should 
take insurance in the company, will be derived 
chiefly from interest upon funds contributed by 
those teachers in the form of premiums, or by 
universities or colleges in their behalf. 

If the new company, however, is prepared to 
give binding guarantees upon the point in ques- 
tion, the committee is unable to see why it 
should for a moment hesitate to amend its char- 
ter so as to require the company to write only 
participating policies; nor indeed, is the com- 
mittee able to see why a charter permitting this 
should not have been obtained in the first place. 

4. Selection of Bisks 

The committee finds the provisions thus far 
announced with respect to medical examination 
and selection of risks to be indefinite and unsat- 
isfactory. President Pritchett states that "the 
policy of the association will be to make the med- 
ical examination a simple and reasonable one"; 
and he apparently implies that the requirements 
of the association in this respect will be less ex- 
acting than those of conservative companies of- 



236 CAENEGIE 

fering general insurance. The natural effect of 
this — taken in connection with the considera- 
tions already mentioned — will be that the policy- 
holders of the new company will consist largely 
of risks rejected by other companies, while the 
great majority of teachers who are good risks 
will, the committee anticipates, prefer to pur- 
chase their insurance from long-established par- 
ticipating companies of good reputation. 

5. Surrender Value of Annuity Policies 

So far as yet appears from the announcement 
of the insurance company, and from the form 
of annuity policy which it proposes to write, 
there is no indication that annuity policy-holders 
will at any time before reaching the age of sixty- 
five have the option of claiming the cash value of 
their policies instead of an annuity beginning at 
age sixty-five. This is in conflict with the ex- 
press recommendation of the joint commission. 

The teacher who on reaching age sixty-five is 
in failing health or afflicted with an incurable 
disease should not be compelled to invest his 
life 's savings in an annuity. 

6. Disability and Convertibility Clauses 

The committee regrets that the sample forms 
of policies submitted contain a " disability" 
clause which does not in any way comply with 
the former recommendations of this committee, 



PENSIONS 237 

in that it merely provides for a waiver of pre- 
miums in event of disability, but does not pro- 
vide for any disability allowance, as do the dis- 
ability clauses in policies offered by many insur- 
ance companies. We also regret that the term 
policies offered by the association do not contain 
any provision for conversion into higher pre- 
mium contracts, as do the similar policies issued 
by most insurance companies. 

7. Compulsory Participation in the Plan by 

Teachers 

The Eules of the Carnegie Foundation for Ad- 
mission of Institutions and for Granting Betir- 
ing Allowances (1918) provide that (p. 3), 
1 ' After April 22, 1918, colleges and universities 
to be eligible to the associated list, must have ac- 
cepted a participation in the contributory plan 
of old age annuities for their teachers as pro- 
vided in the Teachers' Insurance and Annuity 
Association of America. ' At the date of draft- 
ing this report the committee has received no 
complete statement as to the terms on which this 
participation may be had. 

For reasons stated in its first report 3 a ma- 
jority of this committee does not favor any plan 
which involves compulsory purchase of insur- 
ance or annuities by teachers and the committee 
would regard any attempt by particular institu- 
tions, to designate the company in which teach- 

s School amd Society, December 2, 1916. 



238 CABNEGIE 

ers shall invest their savings, as an intolerable 
invasion of the private rights of the individual 
affected. 

For the reasons above stated, and other less 
important ones which it would unduly lengthen 
this report to include, your committee is unable 
to recommend that this association express its 
approval of the plan of the Teachers' Insurance 
and Annuity Association, or that this association 
cooperate in promoting that plan. The com- 
mittee is, for the same reason, unable to hold that 
members of this association would be acting 
either for their own interest or that of their pro- 
fession in purchasing insurance or annuities in 
the new corporation, under its present rules and 
form of organization. 

The committee further expresses the hope that 
all teachers will energetically oppose any at- 
tempt to use the power of university governing 
boards to prescribe to members of university 
faculties the manner in which they shall invest 
their own savings, whether in the form of insur- 
ance, the purchase of annuities, or in any other 
manner. 

Finally, the committee recommends that this 
committee be discharged and that a new com- 
mittee be constituted with authority on behalf 
of the association : 

(a) To examine and report upon the actu- 
arial data on the basis of which the foundation 



PENSIONS 239 

adopted its revised schedule of pension allow- 
ances, as published in the foundation's state- 
ment of April 28, 1918, and to observe and re- 
port upon the administration of the existing pen- 
sion system, and 

(&) To examine any modified plans of the 
Teachers' Insurance and Annuity Association of 
America, if such should be offered, and to inves- 
tigate the possibility of effecting suitable insur- 
ance for college teachers either through the co- 
operation of established insurance companies, or 
the organization of a mutual insurance company 
for college teachers, and to report the results of 
their investigation to this association. 

The Committee : 

Thomas S. Adams, Yale University, 

Walter W. Cook, Yale University, 

F. S. Diebler, Northwestern University, 

Frank H. Dixon, Dartmouth College, 

Thomas C. Esty, Amherst College, 

W. F. Gephart, Washington University, 

John H. Gray, Board of Appliance, 39 

Whitehall St., New York City, 
Henry B. Gardiner, Brown University, 
M. W. Haskell, University of California, 
Otto Heller, Washington University, 
Jacob H. Hollander, The Johns Hopkins 

University, 
S. S. Huebner, University of Pennsylvania, 
Joseph Jastrow, University of Wisconsin, 
E. W. Kemmerer, Princeton University, 



240 CAENEGIE 

Alfred C. Lane, Tufts College, 4 

Arthur 0. Lovejoy, The Johns Hopkins 

University, 
H. A. Millis, University of Chicago, 
H. L. Rietz, Iowa University, 4 
Ashley H. Thorndike, Columbia Univer- 
sity, 
Henry S. White, Vassar College, 
"W. F. Willcox, Cornell University, 
Harlan F. Stone, Chairman, Columbia 
University. 

* Professor Lane and Professor Rietz are not prepared 
to condemn the general principle of compulsory insur- 
ance, provided it is stipulated for by the contract be- 
tween the teacher and his college or university at the 
time of his appointment. 



SUPPLEMENTARY STATEMENT CONCERN- 
ING THE PLAN OF COMPULSORY AND 
CONTRIBUTORY ANNUITIES PRO- 
POSED BY THE CARNEGIE 
FOUNDATION! 

Certain information concerning the plan for 
compulsory annuities, referred to near the close 
of the report of Committee P, has come into the 
hands of the officers of the association and the 
chairman of the committee since the report was 
drafted. In view of the importance of the mat- 
ter, and of the desirability of prompt communi- 
cation of this information to members of the as- 
sociation, it has seemed best to the president of 
the association and the chairman of the com- 
mittee to submit the following supplementary 
statement, for which the signers alone are re- 
sponsible. A submission of the matter to the 
committee would have precluded immediate pub- 
lication. 

A circular of the Carnegie Foundation which 
bears the date of December 6, 1918, but which 
had not reached the chairman of the committee 
before the Baltimore meeting, states as follows 
the terms upon which colleges or universities 
may be admitted to participation in the new sys- 
tem of compulsory annuities for teachers re- 
ferred to in the committee 's report : 

i Printed in School and Society, February 1, 1919. 

241 



242 CAENEGIE 

1 (a) Each full-time professor, associate professor, 
assistant professor, or officer of equivalent rank in the 
service of associated institutions, who does not enjoy the 
privileges given under the non-contributory plan now in 
operation, shall contribute annually in monthly install- 
ments five per cent, of his salary toward an old age an- 
nuity contract in the Teachers Insurance and Annuity 
Association. In the case of institutions admitted here- 
after to the associated list this requirement shall apply 
to all professors, associate professors, assistant professors 
and officers of equivalent rank admitted to the service 
of the institution after acceptance of participation in 
the contributory plan. 

(&) Each associated institution shall pay a correspond- 
ing five per cent, in the case of any such contributing 
professor, associate professor, assistant professor or offi- 
cer of equivalent rank, provided that the institution 
shall be under no obligation to begin its payments before 
the teacher begins his, or to make annual contributions 
in excess of those made by him. 

(c) Each institution shall make a like contribution in 
the case of any teacher below the rank of assistant pro- 
fessor who has voluntarily accepted a participation in 
the contributory plan and who has had not less than 
three years of service as a teacher in a college, univer- 
sity or technical school. 

2. The trustees of the Carnegie Foundation request 
that any institution now associated with the foundation 
which desires to be admitted to the new privileges of the 
foundation, including disability allowances, will announce 
its acceptance of the contributory system, and the spe- 
cific plan upon which the institution itself will partici- 
pate, to become effective not later than January 1, 1920. 

The effect of these provisions would be to es- 
tablish a system of compulsory annuity con- 
tributions by teachers in the institutions in 



PENSIONS 243 

which the provisions are adopted. In such insti- 
tutions every teacher of the rank of assistant 
professor or above will — whether or not he needs, 
desires or can afford to purchase an annuity in 
this amount — be required to pay five per cent, of 
his salary towards the cost of an annuity in the 
new insurance corporation. He will, however, 
receive a like amount from his institution to- 
wards the purchase of the annuity. Colleges or 
universities imposing this requirement upon 
their teachers, and making the specified con- 
tribution, will be listed as " associated institu- 
tions ' ' ; and to teachers in institutions on this list 
the foundation announces its " intention' ' (but 
"without any legal obligation") of granting the 
two following additional privileges: 

(a) "The foundation will provide from its in- 
come, if necessary, such amounts as may be nec- 
essary to secure to teachers in associated colleges 
and universities an annual return of four and 
one half per cent, on the payments made by them 
to the Teachers Insurance and Annuity Associa- 
tion for the purchase of deferred annuities — 
said sums to be paid at the time of retirement or 
in case of death." (Policy holders not in asso- 
ciated institutions are guaranteed by the insur- 
ance company interest at the rate of four per 
cent, only.) 

(&) The foundation also intends to grant to 
teachers in associated institutions disability al- 
lowances upon the following terms : 



244 CAENEGIE 

(a) Disability shall be interpreted to mean total per- 
manent disability as certified by a medical examiner 
designated by the foundation. 

(b) To be eligible to a disability allowance the 
teacher must have contributed for not less than five years 
toward an old age annuity and must have been during 
the period in active service. 

(c) When retired on the ground of disability the 
teacher will assign his annuity policy to the foundation. 

(d) The foundation will provide an annuity of two 
thirds the amount the teacher would have obtained if he 
had continued to age sixty-five average contributions 
equal to the average of the five years preceding his disa- 
bility. The annuity payments will continue for life, or 
in case of death, until the accumulation to the credit of 
the teacher has been returned to his estate. Annuity al- 
lowances will be limited to a maximum of three thousand 
dollars, and are subject to discontinuance in case of the 
annuitant's recovery of health. In the case of such re- 
covery the unexpended portion of the contributions made 
by and for the teacher, and their accumulations, shall 
remain to his credit. 

Teachers in colleges or universities not upon 
the list of associated institutions may purchase 
insurance or annuities in the new company, but 
will not enjoy the two additional benefits above 
specified, which are offered by the foundation, 
not by the insurance company, and are not con- 
tractual. 

The question thus arises whether it is to the 
interest of teachers, and of the institutions, that 
colleges and universities should accept the con- 
tributory plan, and impose upon their professors 
the requirement that they devote a portion of 



PENSIONS 245 

their salaries to the purchase of deferred annu- 
ities in the new Teachers Insurance and Annuity 
Association. Upon this point the signers of this 
supplementary statement offer the following ob- 
servations : 

1. There is manifestly a strong presumption 
— for reasons indicated in the report of the com- 
mittee — against action by college or university 
trustees which would have the effect of com- 
pelling all teachers of professorial rank, not 
merely to purchase annuities which they may 
neither need nor desire, but also to make this in- 
vestment of their savings in a particular com- 
pany designated by the trustees. There appears 
to us to be an equally manifest presumption 
against colleges offering a bonus to teachers in 
order to induce them to purchase insurance in a 
particular company. In our opinion, colleges 
or universities which are disposed to add five 
per cent, to the salaries of teachers on condition 
that the teachers devote this and a like sum from 
his present salary to the purchase of a deferred 
annuity, should leave the teacher free to select 
the company in which he will thus invest a por- 
tion of his compensation. 

It may, however, be contended that the pre- 
sumptions just mentioned are offset by the fact 
that the Carnegie Foundation offers institutions 
two specific inducements to require their teach- 
ers to purchase annuities in the Teachers Insur- 
ance and Annuity Corporation, and to make con- 



246 CAENEGIE 

tributions from their corporate funds towards 
the same purpose — the inducements, namely, of 
disability insurance, and the addition of one 
half of one per cent, to the interest on payments 
made towards the purchase of annuities in the 
new company. The question consequently re- 
solves itself into this : Are these two benefits suf- 
ficient to annul the presumptions above men- 
tioned, and to justify boards of trustees in en- 
tering into an agreement with the Carnegie 
Foundation for the establishment of the pro- 
posed contributory and compulsory system of 
professorial annuities? Upon this question the 
following considerations seem pertinent. 

(a) The Carnegie Foundation does not con- 
tract, nor does it promise, to grant the two ben- 
efits specified to the teachers in institutions 
which may adopt the proposed plan. It care- 
fully disclaims any contractual responsibility, 
and merely declares its "intention" of granting 
those benefits. Experience has shown, however, 
that in great part the intentions announced by 
the Carnegie Foundation remain unfulfilled. 
The foundation has, in the course of its history, 
offered to American colleges and universities, 
upon certain conditions, an extensive series of 
benefits for their teachers. In spite of the ful- 
fillment of the conditions by many institutions, a 
number of the most important of these benefits 
have been withdrawn, and the rest have been 
greatly reduced in value. It appears to us, 



PENSIONS 247 

therefore, that a declaration of intention by this 
corporation does not afford a substantial basis 
for any action by the governing board of a col- 
lege or university. 

(&) In any case, any sums taken out of the 
income of the foundation to provide disability 
insurance for teachers in institutions on the new 
"accepted list" or to increase the rate of interest 
on future annuity payments, must reduce by so 
much the sum available for fulfilling the "rea- 
sonable expectations" of teachers entitled to 
pensions under the old rules. Committee P has, 
as its report indicates, urged upon the trustees 
of the foundation that a "scrupulous regard" 
for the obligations of the foundation to these 
older teachers would require that those expecta- 
tions — and especially such as were justified by 
the rules in force in 1915 — should be as nearly 
fulfilled as the resources of the foundation may 
permit, though they can not in any event be ful- 
filled completely. The committee had under- 
stood the trustees to accept this principle and to 
declare their intention of acting upon it. Never- 
theless, it is now announced that a part of the 
income of the foundation will be diverted to 
other uses. What should be clearly understood, 
both by teachers and boards of trustees, is that 
the resources which the foundation may employ 
to give the proposed new benefits to one set of 
teachers will be taken away from another set of 
teachers (usually in the same institutions), who 



248 CARNEGIE 

have in equity a prior claim — as the trustees of 
the foundation have formally recognized. 

(c) The disability insurance offered by the 
foundation applies only in cases of " total per- 
manent disability." Few teachers suffer total 
permanent disability, as this term is usually con- 
strued by the courts ; but against lesser disabil- 
ities which yet might disqualify teachers for the 
practise of their vocation no insurance appears 
to be offered. One of the two benefits which the 
foundation now declares its intention of grant- 
ing (to teachers in institutions which comply 
with its new requirements) thus appears to be 
of very limited value, even supposing that the 
intention should be realized. The other new 
benefit — which is equally non-contractual — 
namely, the offer of an additional one half per 
cent, interest on the accumulated sums paid by 
teachers and institutions towards teachers' an- 
nuities, brings the total rate of interest on these 
payments to less than can be obtained from gov- 
ernment or municipal bonds — the purchase of 
which would be a much more advantageous 
means of accumulating the amount necessary for 
the eventual purchase of an annuity. 

The proposed new arrangement, it should 
further be noted, has the effect of continuing 
the supervisory relation of the foundation to the 
American colleges and universities. For reasons 
which have been set forth in the reports of Com- 
mittee P, we regard it as undesirable that this 



PENSIONS 249 

relation should become permanently established. 
After the arrangement is entered into by any 
college, it will remain within the power of the 
foundation to amend or alter its rules of eligibil- 
ity to the "list of associated institutions, ' 9 and 
so to exercise pressure upon the policy of an in- 
stitution, by threatening to remove the institu- 
tion from the list. 2 The effect of the removal 
from that list of a college or university which 
failed to comply with the amended regulations, 
would apparently be to deprive teachers in that 
institution of any further claim to the benefits 
held out to them by the foundation at the time 
the institution was originally placed upon the 
list. It is, indeed, provided (though "non-con- 
tractually") that removal of a college from the 
associated list "shall not result in the discon- 
tinuance of retiring allowances already granted. " 
There is no provision, however, precluding the 
discontinuance of benefits not yet actually 
granted, but only made the subject of a declara- 
tion of intention by the foundation. Such dis- 
continuance, nevertheless, would mean the dis- 
appointment of definite expectations, which the 
governing board of the college would be jointly 
responsible with the foundation for having 
caused the teacher to form — expectations by 

2 See tl Rules for the Admission of Institutions, 
1918/ J page 3. It will also be remembered that the per- 
sons who manage the foundation will control the surplus 
accumulations of the new insurance company. 



250 CABNEGIE 

which his plans of life and mode of investment 
of his savings would have been influenced. A 
governing board, under these circumstances, 
would be subject to a material inducement to 
make such changes in its organization or meth- 
ods as the foundation might dictate. It appears 
to us anomalous and dangerous that an irre- 
sponsible outside body should, by the voluntary 
action of college or university boards, be put in 
a position from which it can subsequently exer- 
cise this kind of material pressure upon the pol- 
ices of those boards. The opinions of the Car- 
negie Foundation, or of its president, concern- 
ing educational questions should, in our judg- 
ment, rely upon their intrinsic merit for their 
influence upon the policies of our higher institu- 
tions ; that influence should not be reenf orced by 
an arrangement enabling the foundation by the 
threat of a sudden withdrawal of anticipated 
benefits, to involve in more or less serious em- 
barrassment boards or administrative officers 
who decline to conform to its views. 

It remains to ask whether the teacher will not 
substantially benefit by the provision that his 
college or university shall pay half the amount 
of his annuity premiums. Upon this two things 
are to be said. In the first place, it is question- 
able whether much advantage would in the long 
run accrue to the teacher from such an arrange- 
ment. President Pritchett has recently re- 
marked that "a pension paid by an employer is 



PENSIONS 251 

in its practical effect deferred pay, which only 
a minority ever receive. There is, indeed, no 
such thing as a free pension when it is involved 
in the relation which exists between employer 
and employee. It will inevitably be absorbed in 
wages.' ' These remarks obviously apply to a 
contribution made by a college out of its cor- 
porate funds towards the purchase of an annuity 
for a professor. If the institution has the means 
of making such contribution, it has also the 
means of increasing salaries by a corresponding 
amount. In the opinion of many, it is much to 
be preferred that the sum should be paid in the 
form of salary, and not as an inducement to 
teachers to employ their own savings in the pur- 
chase of a specified type of provision for old age 
from a designated non-mutual and non-partici- 
pating insurance company sustaining an anom- 
alous and undesirable relation to our higher 
educational system. An increase of average sal- 
aries in the American colleges is inevitable in 
the near future, for obvious economic reasons — 
unless the quality of the profession is to be al- 
lowed gravely and rapidly to deteriorate. But 
it is probable that, as a rule, this future increase 
will simply be diminished by approximately the 
amount of the payment made by any institution 
towards the purchase of annuities. 

In the second place, what is proposed by the 
Carnegie Foundation is that college and univer- 
sity teachers shall be compelled by the boards of 



252 CARNEGIE 

trustees of their institutions to purchase some- 
thing which some teachers do not need, and 
which many others can not afford and should not 
buy. For it is required by the new plan that the 
joint payments of teachers and institutions shall 
be devoted to the purchase of deferred annuities. 
But most of the younger teachers should be em- 
ploying their savings primarily, not for laying 
up provision for their own old age, but for the 
protection of their dependents. An assistant 
professor at the age of thirty, who is struggling 
to support a wife and children on $1,800 or 
$2,000 a year is usually in no position to buy 
both a future annuity for himself and adequate 
insurance for his family. It is a grave hardship 
to such a teacher to compel him to spend nearly 
ten per cent, of his annual compensation for an 
annuity payable thirty-five or forty years later, 
and — what would frequently result — to leave his 
dependents meanwhile without proper protec- 
tion against the hazard of his death or prolonged 
illness. Most teachers would, and should, pre- 
fer to meet first the more immediate and im- 
perative duty, and to leave provision for their 
age until the later years of their service, when 
their salaries will be larger and their children no 
longer dependent. 

We conclude, therefore, that there is no good 
reason why an institution's contribution towards 
annuities for its teachers — if it desires to make 
such contribution — should be accompanied by 



PENSIONS 253 

the requirement that the annuities shall be 
bought of the new insurance and annuity asso- 
ciation. It is desirable that large institutions 
should establish their own pension systems, con- 
tributory or other. Institutions which are not 
able to do this will, in our opinion, serve neither 
their interest nor that of the teacher by making 
their contemplated additions to the teachers' 
present or deferred compensation contingent 
upon his willingness to invest approximately 
ten per cent, of his total salary in a policy of the 
recently established company. Still less will 
they do so by making such investment com- 
pulsory. 

It is, in any case, manifest that no institution 
should adopt a plan of this kind without full 
consultation with its faculty. A faculty should, 
in our opinion, decline as a body to participate 
in the plan, unless it shall, after full examina- 
tion and discussion by all the teachers affected, 
have been approved by a substantial majority. 

Arthur 0. Lovejoy, 
President of the Association 

Harlan F. Stone, 
Chairman of the Committee on Pensions 
and Insurance 



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